We develop a model that shows that asymmetric information can result in two types of credit rationing: conventional quantity rationing, and "risk rationing," whereby farmers are able to borrow but only under high-collateral contracts that offer them lower expected well-being than a safe,...

This article provides a methodological bridge leading from the well-developed theory of credit rationing to the less developed territory of empirically identifying credit constraints. We begin by developing a simple model showing that credit constraints may take three forms: quantity rationing,...

From field observations of credit cooperatives in Cameroon, we find that 19% of the loans taken are fully collateralized by savings held in the same institutions. This behavior is costly to the borrower, as it represents a net interest payment of about 24% per year. While traditional...

We model the role of the informal credit sector in developing countries. The informational advantage of informal lenders is portrayed as the ability to monitor borrowers. Monitoring reduces the incentive problem and allows for contracts with lower collateral. This enables informal lenders to...

We develop a model that shows that asymmetric information can result in two types of credit rationing: conventional quantity rationing, and “risk rationing,” whereby farmers are able to borrow but only under high-collateral contracts that offer them lower expected well-being than a safe,...

This paper examines whether agricultural insurance can boost investment by small scale farmers in West Africa. It is based on a randomized evaluation designed to analyze the impacts of index insurance for cotton farmers in Burkina Faso. No impact of insurance was found on cotton, but, consistent...