Using Surveys to Estimate Credit Constraint Prevalence
A key method for estimating the pervasiveness of credit constraints within an economy is through the use of surveys administered to the population.
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CORE Econ
Economics
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Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.9 Lenders and borrowers and differences in wealth - The Economy 2.0 Microeconomics @ CORE Econ
Related
Using Surveys to Estimate Credit Constraint Prevalence
Using Experiments to Investigate Credit Constraints
Evaluating Methods for Identifying Credit Constraints
The Microfinance Promise (Morduch, 1999)
Interpreting Evidence of Credit Market Behavior
An economist observes that in a specific region, many farmers with fertile land choose not to apply for available bank loans to purchase high-yield seeds, which have been shown to significantly increase crop output and profits. Instead, they rely on their own saved, lower-quality seeds. Based on this observation alone, what is the most likely conclusion an economist would draw about the credit market in this region?
An economist observes that in a particular city, individuals living in low-income neighborhoods are significantly less likely to hold loans from formal banks compared to individuals in high-income neighborhoods. The economist concludes that this observation is direct proof that banks are discriminating against and unfairly excluding potential borrowers from low-income areas. Which of the following statements provides the most critical and economically sound evaluation of the economist's conclusion?
Analyzing Low Loan Uptake
An economist is studying credit markets in different regions. Match each observation with the primary credit market limitation it illustrates.
Evaluating Economic Interpretations of Credit Market Data
If a large number of small business owners in a community do not take out loans from a newly available lending program, this observation is sufficient evidence to conclude that their business ventures are not profitable enough to make borrowing worthwhile.
Evaluating Investigative Approaches in Credit Markets
A government agency launches a program offering low-interest loans to aspiring entrepreneurs in a developing region to stimulate business creation. After one year, an economist observes that the number of loans disbursed is far below the agency's target. To understand this outcome, what is the most crucial initial distinction the economist must investigate?
Discerning Evidence of Credit Constraints
Learn After
Data Source and Methodology for Figure 9.15
Limitations of Survey Data for Assessing Credit Constraints
An economist is designing a survey to measure the prevalence of credit constraints in a population. One proposed question is: 'If you needed to borrow $5,000 for an emergency, do you think a bank would approve your loan application?' Which of the following represents the most significant analytical weakness of using responses to this question to determine if someone is credit constrained?
Evaluating a Method for Measuring Credit Constraints
Estimating Credit Constraints from Survey Data
A survey finding that 10% of the population was denied a loan in the last year fully captures the extent of credit constraints in that economy.
A team of economists is using a survey to understand why people may not have access to credit. Match each survey question to the specific type of credit market limitation it is designed to identify.
Designing a Survey Question for Credit Constraints
A survey designed to measure the extent of credit market limitations in a country asks two separate questions:
- 'In the past 12 months, did you apply for a loan and have your application rejected?'
- 'In the past 12 months, was there a time you needed a loan but chose not to apply because you believed your application would be rejected?' The survey finds that 6% of respondents answered 'Yes' to the first question, and 9% of respondents answered 'Yes' to the second question. Assuming no respondent answered 'Yes' to both questions, what is the most reasonable estimate of the percentage of the population that is credit constrained based on this data?
Critiquing a Survey Methodology for Credit Constraints
Evaluating Survey Question Design for Credit Constraints
A national survey on household finance provides the following data for a country:
- 15% of households applied for credit in the past 12 months.
- Of the households that applied for credit, one-third were denied.
- An additional 10% of all households reported that they needed credit but did not apply because they believed their application would be denied.
Based solely on this information, what is the most accurate estimate of the percentage of households in this country that are credit constrained?