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Do Conditional Cash Transfers Affect Credit Market Outcomes: Evidence from Households in Mexico

Svarch, Malena
http://rave.ohiolink.edu/etdc/view?acc_num=osu1253544331

Abstract Details

2009, Master of Science, Ohio State University, Agricultural, Environmental Development Economics.
This thesis explores the potential influence of access to a conditional cash transfer program (CCTP) on credit market outcomes. This influence is theoretically ambiguous. On the demand side, access to a free transfer of funds may reduce the willingness to seek more expensive funds in the credit market (substitution effect). The transfer, however, is not covariant with the household income flows and, therefore, it may induce a change toward more profitable and riskier productive activities (risk-coping effect). On the supply side, the availability of a riskless cash flow improves the lenders’ perception about the household’ ability to repay loans (creditworthiness effect). While the latter two effects are expected to be positive, the former one is expected to be negative. The net outcome will depend on a number of specific initial conditions.The thesis empirically explores these issues by using household panel data from participants in the Progresa/Oportunidades CCTP in Mexico and non-participant control households. The data are generated by a randomized assignment social experiment, for 2002, 2003 and 2004. Using fixed effects and instrumental variables methods, the econometric results suggest that participation in the program increases the likelihood of participation in credit markets (either as a consequence of the risk-coping effect or the creditworthiness effect). These results also indicate, however, that once a household participates in the credit market, it applies for a smaller amount when it is enrolled in the CCTP than otherwise (suggesting at least a weak substitution effect). The increased participation in credit markets is a potential contribution of the CCTP to the breadth of outreach of finance in Mexico. The results reflect the behavior of urban households, as there are not credit market data for the rural households and, because of the conflicting effects, they cannot be generalized.
Claudio Gonzalez-Vega (Advisor)
Timothy Haab (Committee Member)

Recommended Citations

Citations

  • Svarch, M. (2009). Do Conditional Cash Transfers Affect Credit Market Outcomes: Evidence from Households in Mexico [Master's thesis, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1253544331

    APA Style (7th edition)

  • Svarch, Malena. Do Conditional Cash Transfers Affect Credit Market Outcomes: Evidence from Households in Mexico. 2009. Ohio State University, Master's thesis. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1253544331.

    MLA Style (8th edition)

  • Svarch, Malena. "Do Conditional Cash Transfers Affect Credit Market Outcomes: Evidence from Households in Mexico." Master's thesis, Ohio State University, 2009. http://rave.ohiolink.edu/etdc/view?acc_num=osu1253544331

    Chicago Manual of Style (17th edition)

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© 2009, all rights reserved.
This open access ETD is published by The Ohio State University and OhioLINK.