Promises and pitfalls of digital credit: Empirical evidence from Kenya.

Digital credit is a recent innovation that raises hopes of improving credit access in developing countries. However, up until now, empirical research on the extent to which digital credit actually reaches people who are otherwise excluded from conventional credit markets and whether increased credit...

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Autores principales:	Constantin Johnen, Martin Parlasca, Oliver Mußhoff
Formato:	article
Lenguaje:	EN
Publicado:	Public Library of Science (PLoS) 2021
Materias:	Medicine R Science Q
Acceso en línea:	https://doaj.org/article/a1f83cfafebb4def964bac45878144df
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spelling	oai:doaj.org-article:a1f83cfafebb4def964bac45878144df2021-12-02T20:06:29ZPromises and pitfalls of digital credit: Empirical evidence from Kenya.1932-620310.1371/journal.pone.0255215https://doaj.org/article/a1f83cfafebb4def964bac45878144df2021-01-01T00:00:00Zhttps://doi.org/10.1371/journal.pone.0255215https://doaj.org/toc/1932-6203Digital credit is a recent innovation that raises hopes of improving credit access in developing countries. However, up until now, empirical research on the extent to which digital credit actually reaches people who are otherwise excluded from conventional credit markets and whether increased credit access is sustainable or threatened by high default and blacklisting rates is very scarce. Using representative data from Kenya, this article shows that digital credit increases borrowing opportunities, including for people less likely to otherwise have credit access in the conventional credit markets. However, we find that digital credit borrowing is also responsible for 90% of all blacklistings, which is partially driven by higher default rates in the digital credit market but also by a higher probability that digital credit defaults lead to blacklisting of the borrower, compared to defaults in other credit markets.Constantin JohnenMartin ParlascaOliver MußhoffPublic Library of Science (PLoS)articleMedicineRScienceQENPLoS ONE, Vol 16, Iss 7, p e0255215 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	Medicine R Science Q
spellingShingle	Medicine R Science Q Constantin Johnen Martin Parlasca Oliver Mußhoff Promises and pitfalls of digital credit: Empirical evidence from Kenya.
description	Digital credit is a recent innovation that raises hopes of improving credit access in developing countries. However, up until now, empirical research on the extent to which digital credit actually reaches people who are otherwise excluded from conventional credit markets and whether increased credit access is sustainable or threatened by high default and blacklisting rates is very scarce. Using representative data from Kenya, this article shows that digital credit increases borrowing opportunities, including for people less likely to otherwise have credit access in the conventional credit markets. However, we find that digital credit borrowing is also responsible for 90% of all blacklistings, which is partially driven by higher default rates in the digital credit market but also by a higher probability that digital credit defaults lead to blacklisting of the borrower, compared to defaults in other credit markets.
format	article
author	Constantin Johnen Martin Parlasca Oliver Mußhoff
author_facet	Constantin Johnen Martin Parlasca Oliver Mußhoff
author_sort	Constantin Johnen
title	Promises and pitfalls of digital credit: Empirical evidence from Kenya.
title_short	Promises and pitfalls of digital credit: Empirical evidence from Kenya.
title_full	Promises and pitfalls of digital credit: Empirical evidence from Kenya.
title_fullStr	Promises and pitfalls of digital credit: Empirical evidence from Kenya.
title_full_unstemmed	Promises and pitfalls of digital credit: Empirical evidence from Kenya.
title_sort	promises and pitfalls of digital credit: empirical evidence from kenya.
publisher	Public Library of Science (PLoS)
publishDate	2021
url	https://doaj.org/article/a1f83cfafebb4def964bac45878144df
work_keys_str_mv	AT constantinjohnen promisesandpitfallsofdigitalcreditempiricalevidencefromkenya AT martinparlasca promisesandpitfallsofdigitalcreditempiricalevidencefromkenya AT olivermußhoff promisesandpitfallsofdigitalcreditempiricalevidencefromkenya
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Promises and pitfalls of digital credit: Empirical evidence from Kenya.

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