This paper draws a link between self-control problems and the contractual mechanisms of microcredit. We use a series of lab experiments in the fieldʺ which were designed to elicit measures of time discounting on a sample of 573 individuals in rural Karnataka, India. Evidence from the...

Microfinance has been heralded as an effective way to address imperfections in credit markets. From a theoretical perspective, however, the success of microfinance contracts has puzzling elements. In particular, the group-based mechanisms often employed are vulnerable to free-riding and...

Microcredit is an innovative financial tool designed to reduce poverty and fix credit market imperfections. We use experimental measures of time discounting and risk aversion for villagers in south India to highlight behavioral features of microcredit. Conditional on borrowing from any source,...