Contestable Credit Markets and Household Welfare: Panel Data Evidence from Ethiopia

Dereje Regasa; David Fielding; Helen Roberts

doi:10.1080/00220388.2020.1826447

Contestable Credit Markets and Household Welfare: Panel Data Evidence from Ethiopia

Dereje Regasa
, David Fielding
, Helen Roberts

Global Development Institute

University of Otago

Research output: Contribution to journal › Article › peer-review

Abstract

© 2020 Informa UK Limited, trading as Taylor & Francis Group. This paper explores the impact of credit constraints on household welfare in Ethiopia. We use a three-wave panel dataset for rural and small-town households to estimate the effects of household borrowing constraints on two alternative indicators of household welfare: consumption expenditure and asset ownership. The presence of a constraint is treated as an endogenous regressor, using an instrumental variable based on Baumol’s theory of contestable markets. We find that credit constraints have a significantly negative effect on both outcomes. These results are robust to several alternative specifications of the model.

Original language	English
Pages (from-to)	1-18
Number of pages	18
Journal	The Journal of Development Studies
DOIs	https://doi.org/10.1080/00220388.2020.1826447
Publication status	Published - 20 Oct 2020

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abstract = "{\textcopyright} 2020 Informa UK Limited, trading as Taylor \& Francis Group. This paper explores the impact of credit constraints on household welfare in Ethiopia. We use a three-wave panel dataset for rural and small-town households to estimate the effects of household borrowing constraints on two alternative indicators of household welfare: consumption expenditure and asset ownership. The presence of a constraint is treated as an endogenous regressor, using an instrumental variable based on Baumol{\textquoteright}s theory of contestable markets. We find that credit constraints have a significantly negative effect on both outcomes. These results are robust to several alternative specifications of the model.",

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Contestable Credit Markets and Household Welfare: Panel Data Evidence from Ethiopia

Abstract

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