Excerpt
Excerpt
Repayment Flexibility Can Reduce Financial Stress: A Randomized Control Trial with Microfinance Clients in India, Rohini Pande, September 26, 2012, Paper, "Financial stress is widely believed to cause health problems. However, policies seeking to relieve financial stress by limiting debt levels of poor households may directly worsen their economic well-being. We evaluate an alternative policy – increasing the repayment flexibility of debt contracts. A field experiment randomly assigned microfinance clients to a monthly or a traditional weekly installment schedule (N=200). We used cell phones to gather survey data on income, expenditure, and financial stress every 48 hours over seven weeks."