Mobile Internet, Collateral, and Banking
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Summary:
Combining administrative data on credit, internet penetration and a land reform in Rwanda, this paper shows that the complementarity between technology and law can overcome financial frictions. Leveraging quasi-experimental variation in 3G availability from lightning strikes and incidental coverage, we show that mobile connectivity steers borrowers from microfinance to commercial banks and improves loan terms. These effects are partly due to the role of 3G internet in facilitating the acquisition of land titles from the reform, used as a collateral for bank loans and mortgages. We quantify that the collateral's availability mediates 35% of the overall effect of mobile internet on credit and 80% for collateralized loans.
Series:
Working Paper No. 2024/070
Subject:
Bank credit Commercial banks Financial inclusion Financial institutions Financial markets Loans Mobile internet Money Technology
Frequency:
regular
English
Publication Date:
March 29, 2024
ISBN/ISSN:
9798400270734/1018-5941
Stock No:
WPIEA2024070
Format:
Paper
Pages:
69
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