July 2013
Long-Run Price Elasticities of Demand for Credit
Evidence from a Countrywide Field Experiment in Mexico
In writing this paper, the authors worked with Compartamos Banco, the largest microlender in Mexico, to estimate long run price elasticities by randomizing the interest rate offered on its core group lending product, Credito Mujer. The study found that long-run demand is price elastic, with lower prices bringing in substantial numbers of new borrowers, and thus Compartamos has sustainably served more clients by cutting rates, at no cost to shareholders.
© 2013 Center for Global Development (CGD)
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Author:
Dean Karlan, Jonathan Zinman
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Issue:
331
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