10.17889/E110686
Mullainathan, Sendhil
Karlan, Dean
Roth, Benjamin N.
Replication data for: Debt Traps? Market Vendors and Moneylender Debt in India and the Philippines
ICPSR Inter-university Consortium for Political and Social Research
2019
10.1257/aeri.20180030
10.1257/aeri.20180030
V0
A debt trap occurs when someone takes on a high-interest-rate loan and is barely able to pay back the interest, and thus perpetually finds themselves in debt (often by refinancing). Studying such practices is important for understanding financial decision-making of households in dire circumstances, and also for setting appropriate consumer protection policies. We conduct a simple experiment in three sites in which we paid off high-interest moneylender debt of individuals. Most borrowers returned to debt within six weeks. One to two years after intervention, treatment individuals were borrowing at the same rate as control households.