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Failing in the FieldWhat We Can Learn When Field Research Goes Wrong$
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Dean Karlan and Jacob Appel

Print publication date: 2018

Print ISBN-13: 9780691183138

Published to Princeton Scholarship Online: January 2019

DOI: 10.23943/princeton/9780691183138.001.0001

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Interest Rate Sensitivity

Interest Rate Sensitivity

Ignoring the Elephant in the Room

(p.84) Chapter 7 Interest Rate Sensitivity
Failing in the Field

Dean Karlan

Jacob Appel

Princeton University Press

This chapter details a study conducted with Opportunity International Savings and Loans, Ltd. (OISL)—one of Ghana's largest microfinance institutions—which analyzes the implications of interest rate for both revenue and outreach. The basic concept was simple: market loans to different people using a range of interest rates and observe how many and what kinds of people respond to the offer. The single biggest hang-up was the guarantor requirement. Most applicants had a hard time finding family or friends who could commit to cover a loan; it was also a hassle to do the paperwork. On the surface, this is a simple case of low participation. Far fewer clients took loans than was projected in the pilot, slashing the study's power. That so many clients dropped out because of the sheer duration of the application process suggests a second kind of failure: the study placed too high a burden on OISL's staff.

Keywords:   interest rate, guarantor requirement, low participation, application process, staff capacity

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