CLAS/SIRGLAS Workshop

The Stanford Interdisciplinary Research Group on Latin American Studies (SIRGLAS) will be holding a workshop February 22 at 5.30pm at the Bolivar House. Presenters and topics are listed below. As always, dinner will be served! 

If you're interested in presenting in presenting at a later date please email Edgar at edgarf1 [at] stanford.edu (edgarf1[at]stanford[dot]edu). And if you or anyone you know are interested in getting updates from the listserv, they can sign up here.

Mitigating the Risks of Financial Inclusion with Loan Contract Terms: Experimental Evidence from Mexico

Diego Jiménez

PhD student in Economics

We use observational and experimental data to study a large Mexican bank’s experience with borrowers possessing little or no formal credit history. Approximately one-third of card- holders fall delinquent within two years of card acquisition and about two-fifths of cards are cancelled or revoked during this time. We construct measures of profits and find they are low (per customer) and variable. Borrowers who generate a good formal credit history with the bank are more likely to switch banks or add cards providing suggestive evidence of a lending externality. We next use a large scale randomized experiment on a representative sample of the bank’s borrowers and find that large changes in contract terms (interest rates and minimum payments) have small effects – treatment effects are an order of magnitude smaller than baseline exit and delinquency rates. Some evidence suggests that borrower responses to contract term variations are limited because punishment is swift and outside options are unattractive.

Remittances and Inequality in Social Service Provision

Hans Lueders

PhD student in Political Science

International remittances are one of the major sources of foreign finance in low- and middle-income countries. They often exceed the amount of foreign development assistance a country receives, and sometimes even surpass Foreign Direct Investment inflows. Numerous scholars study the economic effects of remittances and often find that they are the “new development mantra” (Kapur 2004) because they improve recipient households’ income, long-term investment, health, or schooling. However, I argue that existing findings do not allow us to conclude that remittances improve countries’ overall economic development because we lack evidence on the effects of remittances on non-recipient households, who are typically poorer than recipients. Inasmuch as non-recipients do not benefit from remittance income, remittances may simply increase inequality between recipients and non-recipients, thus fostering unequal economic development. However, remittances may also have spillover effects that improve the livelihood of non-recipients as well, resulting in more equitable development. This project takes a first stab at examining the effect of remittances on economic development more broadly by studying how remittances affect (inequality in) access to social services between recipient and non-recipient households in Mexico. The project is in its early stages. I will present some hypotheses about the potential positive or negative effects of remittances on non-recipient households and my empirical strategy to test these hypotheses.