Digital technologies offer the potential to overcome many of the barriers that constrain credit provision in the developing world. This study draws on a randomized field trial to explore whether and how Paytime, an innovative digital credit system that provides input loans to farmers, can increase investment and influence financial behavior, yields, and profits. Paytime leverages a non-traditional credit scoring system using mobile phones to determine loan eligibility. Applicants who are found to be eligible and accept the loan offer then receive loans that they are expected to be paid back by a predetermined date. In addition to estimating Paytime’s overall effectiveness at filling credit gaps, this study will explore how two specific design features — whether SMS reminders for repayment, and whether a flexible repayment period is granted — affect default rates, as well as investment patterns and other financial behaviors. This research will contribute to the design and implementation of digital credit programs by helping to improve product design, and by rigorously evaluating, for the first time, the impact of a digital credit system that is designed for small-scale farmers. Results forthcoming.
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