Paper: «Does formal credit leads to more financial inclusion or distress? Results using a strict scoring rule in Paraguay» (joint with Viviane Azevedo, Jeanne Lafortune, Liliana Olarte)
Abstract: We exploit the fact that a formal bank in Paraguay offered a new credit product using a strict assignment scoring rule and look at the impact of obtaining that credit through a regression discontinuity. Using administrative data from the Credit Bureau, we find that those who were loan-eligible saw a substantial and long-lasting increase in the number of information requests to the Bureau, particularly from formal sources (finance companies and cooperatives). We find limited evidence that this increased interaction with the financial markets increased the amount of debt declared as unpaid 2-3 years after the loan was offered but did lower loan-eligible individuals’ average credit score. Heterogeneity analysis suggests that those that were unknown to the financial sector benefited more without falling into default but those who were excluded for previous bad behavior simply worsened their credit situation by obtaining this loan. Self-reported outcomes for a subset of applicants suggest significant economic benefits for those who became loan-eligible, the main channel being lower credit costs.
Bio: José Tessada es director de la Escuela de Administración de la Pontificia Universidad Católica de Chile desde el año 2018, donde también es Profesor Asociado desde el año 2015. Antes de integrarse a la Escuela de Administración como Profesor Asistente el año 2010 fue investigador en The Brookings Institution, un centro de investigación en Washington, D.C. Estados Unidos. También ha sido Profesor Visitante en el Departamento de Economía en la Universidad de Maryland en College Park, Estados Unidos. Su trabajo académico ha sido publicado en revistas internacionales y en capítulos de libros. Sus principales áreas de investigación son economía laboral y comportamiento financiero de hogares. José es Ingeniero Comercial y Magister en Economía mención Economía Financiera de la Pontificia Universidad Católica de Chile, y Ph.D. in Economics del Massachusetts Institute of Technology.
