Behavioral Microfinance: Evidence from a Field Experiment in Cairo (original) (raw)

Understanding the behavior of the poor has long been an important focus of microfi nance (MF) research. On the one hand, several studies have been conducted to understand the fi nancial decisions of MF clients related to the construction of trustworthiness and social collateral (which replaces fi nancial collateral in MF loans). On the other hand, the natural counterpart of trustworthiness (i.e., risk taking) has been another main point of focus when evaluating MF clients ' behavior. Yet, most of these studies remain observational, use standard surveys about behavior, or make use of fi nancial information only -as found in many qualitative impact assessments and econometric studies. Th erefore, the usual biases when reporting stated behavior, in particular about items that are diffi cult to rationalize (such as trustworthiness and risk taking), are diffi cult to capture. Only recently have experimental games become popular in MF to gain deeper insights into MF clients and reduce these biases.