Are Psychometric Tools a Viable Screening Method for Small and Medium-Size Enterprise Lending? Evidence from Peru

This study collaborated with the Entrepreneurial Finance Lab and a large bank in Peru to use psychometrics for small and medium-size enterprise lending. Applicants used a psychometric tool and those who achieved a score higher than a threshold were offered a loan. Using a regression discontinuity design and credit bureau data, the study finds that the tool increased small and medium-size enterprise loan use by up to 59 percentage points for applicants without a credit history, without leading to worse repayment behavior. This increase in borrowing resulted primarily from financial institutions other than the partner bank. For applicants with a credit history, the tool did not increase small and medium-size enterprise loan use.

Bibliographic Details

Main Authors:	Arraiz, Irani, Bruhn, Miriam, Ruiz Ortega, Claudia, Stucchi, Rodolfo
Format:	Working Paper biblioteca
Language:	English
Published:	World Bank, Washington, DC 2017-12
Subjects:	ASYMMETRIC INFORMATION, PSYCHOMETRICS, CREDIT RISK, ACCESS TO FINANCE, SMALL AND MEDIUM ENTERPRISES, SMEs, MICROFINANCE,
Online Access:	http://documents.worldbank.org/curated/en/729911513262009360/Are-psychometric-tools-a-viable-screening-method-for-small-and-medium-size-enterprise-lending-evidence-from-Peru https://hdl.handle.net/10986/29012
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