Censored (Tobit) regression is used to estimate the effects of race, location of residence, and sex of the household head on formal debt held by South African households. The magnitude of the effects suggests that lenders discriminate and that formal financial markets could be improved even...

A dynamic, stochastic, rational expectations model of a peasant household with access to deposits and loans (up to a credit limit) is solved and simulated. If formal contracts offer more favorable rates than informal contracts, then access to formal contracts increases average consumption and...