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Working Papers

Are Women Really Better Borrowers in Microfinance? Evidence from Matrilineal and Patrilineal Societies in India
While the universal policy of gender targeting in microfinance stems, inter alia, from the conventional wisdom that women are better credit risks, there has been little research on the underlying reasons for it. Are women wired fundamentally differently than men to be better at repaying loans or is it the social context in which the gender roles operate that motivate their behavior? I study this question by conducting controlled microfinance field experiments in comparable matrilineal and patrilineal societies in two neighboring states of India. My experimental design allows to decompose the channels through which default occurs in microfinance. I observe a reversal of gender effect on loan default across the two societies. I show that patrilineal men have higher strategic default whereas women default strategically more in the matrilineal society. I also find that matrilineal women are less risk averse and are more likely to invest in the risky project than women in patrilineal societies. My results suggest that while women are better clients on average, a universal policy of gender targeting to mitigate default in microfinance might be suboptimal. Thus in microfinance, and more broadly in development policy sphere, policymakers should take into consideration the heterogeneity among men and women and the social context in which the policy is implemented.
Does Group Size Induce Strategic Default in Microfinance?
There is a longstanding debate among policymakers and microfinance institutions on the optimal group size in microfinance. One side of the argument is that a bigger group size reduces the risk of non-strategic default as the risk is shared among the group members. The other side of the argument is that a bigger group size with group liability increase the risk of strategic default by providing incentives to the group members to free ride. The microfinance literature does not provide an unequivocal answer to whether a bigger group size lead to lower default among the borrowers. This is, in part, because previous literature has focused exclusively on the overall default rate without disentangling the effects of non-strategic and strategic default. In this paper, I implement an experimental design to disentangle these two effects by holding the risk of non-strategic default constant across individual and group liability contracts and group liability contracts with different group sizes. Thus, I can get a clean measure of the difference in strategic default between these contracts and thereby answer the policy relevant question of whether a bigger group size induce free riding among microfinance borrowers.
Evaluation of Community Organizations: Governance Support Post-Conflict Needs Assessment Programs in Pakistan
(with Musharraf Cyan, Michael Price and Mark Rider)

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This study evaluates a community driven development (CDD) initiative undertaken in three underdeveloped and crises hit regions in the Khyber Pakhtunkhwa Province of Pakistan. The program was implemented between 2014 and 2015 with a budget of $2.77 million which was funded and supported by the World Bank-Multi Donor Trust Fund. The anticipated beneficiary of the program is about 100,000, of which at least 30 percent are women. The objective of the intervention is to facilitate local communities in organizing themselves in Economic Interest Groups and Clustered Economic Income Groups to develop a community action plan, which provides the basis for project funding. Since Pakistan is an ethnically heterogeneous and fractionalized country, we examine whether ethnic heterogeneity affects the performance of the community groups. Our results suggest that, by and large, the CDD initiative is successful in terms of institutional performance measures. Nearly 85 percent of the groups recommended a project through inclusive, transparent and participatory planning and a significant number of participants believed that they will benefit from the recommended project. However, we see substantial variation in result depending on gender and membership in an ethnically diverse group.
Works in Progress
  • Do Social Ties Reduce Default among Microfinance Borrowers? Evidence from Rural India

  • What Drives Gender Differences in Social Preference? Evidence from Matrlineal and Patrilineal Societies in India(with James Cox)

  • Community Decisions in Public Good Provision under Power Asymmetry: a Field Experiment in Rural Pakistan(with Musharraf Cyan, Michael Price and Mark Rider)

  • Conditional and Unconditional Altruism in Payoff Equivalent Extensive Form Fairness Games

  • Migration of Human Capital in the US: Increasing versus Diminishing Returns to Skill