Repay as you earn: Loan repayment frequency, cash flows, and savings of households

Ravi, S (2014) Repay as you earn: Loan repayment frequency, cash flows, and savings of households. Journal of International Development, 26 (4). pp. 438-453.

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Abstract

This paper analyses household cash management and provides evidence that a household's access to credit is directly improved by its savings. Households that are unable to save tie loan repayment to cash flows and repay as soon as money is earned. We find that income frequency increases loan repayment frequency by 32, but this effect reduces significantly on controlling for savings. Results also show that households on average pay 3.6 higher interest on loans with repayment schedules matching household cash flows. We show this by exploiting unique 'preferred' loan repayment data available for each household and by using presence of marriageable-age girls in household as instrument for savings.

ISB Creators:
ISB CreatorsORCiD
Ravi, SUNSPECIFIED
Item Type: Article
Subjects: Finance
Depositing User: LRC ISB
Date Deposited: 05 Nov 2014 05:49
Last Modified: 05 Nov 2014 05:49
URI: http://eprints.exchange.isb.edu/id/eprint/174
Publisher URL: http://dx.doi.org/10.1002/jid.2884
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