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Biometric and Financial Innovations in Rural Malawi: A Field Experimental Approach
| Principal Investigators: |
Xavier Gine(World Bank, USA)
Dean Yang (university of Michigan, USA)
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Problem & Objective
The income of smallholders in developing countries are constrained by the inability to finance crucial inputs such as fertilizer and improved seeds. Credit supply is limited by the absence of a credit bureau to sanction or reward borrowers, as well as suppressed supply due to poor repayment. This projects aims to demonstrate how biometric technology, specifically fingerprinting, can help improve the functioning of rural credit markets in Malawi. It will test whether a fingerprint-based credit history database can help lenders expand credit to reliable borrowers, while withholding it from past defaulters.
Research Context
Problems monitoring borrowers over time and across lenders are especially acute in Malawi where there is no national identification system. This has made it very difficult to track borrowers and generate accurate credit histories, which has contributed to repayment problems which limit credit supply.
Policy Relevance
Improved access to financial services has the potential to dramatically improve the ability of smallholder farmers to raise crop yields and to expand their participation in commercial agricultural markets. By showing how expanded financial services in rural areas can help farmers afford fertilizer and other inputs on their own, the project can also identify alternative government policies that would raise food security and the well-being of poorer farmers.
Publications
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