Does Participation in Productive Associations Signal Trust and Creditworthiness? Evidence for Nicaragua

Does Participation in Productive Associations Signal Trust and Creditworthiness? Evidence for Nicaragua

This article studies the extent to which participation in productive associations in Nicaragua contributes to increase individuals' access to social programs and credit services. By participating in productive associations, individuals give a...

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Bibliographic Details
Main Authors:	Angel-Urdinola, Diego F., Molina, Ezequiel
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCESS TO CREDIT ACCESS TO LOANS ACCESS TO SERVICES ASYMMETRIC INFORMATION AVERAGE INTEREST BANKS BENEFICIARIES CAPITAL ACCUMULATION CASH TRANSFERS CHECKS COLLECTIVE COLLECTIVE ACTION COLLECTIVE ACTION PROBLEM CONSUMER CONVENTIONAL BANKS COOPERATIVES CREDIT CARDS CREDIT MARKETS CREDIT NEEDS CREDIT RATIONING CREDIT SOURCES CREDIT UNIONS CREDITOR CREDITORS CREDITWORTHINESS DEMOCRACY DEVELOPING COUNTRIES DUMMY VARIABLE ECONOMIC BENEFITS ECONOMIC CONDITIONS ECONOMICS EDUCATION PROGRAMS EMPLOYMENT EMPOWERMENT EQUALITY FAMILIES FARMERS FORMAL CREDIT FORMAL LOANS GAME THEORY GENDER HOUSEHOLD ACCESS HOUSEHOLDS HUMAN CAPITAL IMPERFECT INFORMATION INCOME INDIRECT COSTS INDIVIDUALS INFORMAL CREDIT INFORMAL LENDERS INTEREST RATE INTEREST RATES INTERNATIONAL BANK INVESTMENT ASSET LENDERS LEVEL OF CONFIDENCE LOAN LOAN DECISIONS LOCAL GOVERNMENT LOWER INTEREST RATES MERCHANTS MICRO-CREDITS MICRO-FINANCE MICRO-FINANCE INSTITUTIONS MUNICIPALITY NUTRITION PACIFIC REGION PARTICIPATIONS PERFECT INFORMATION POLITICAL PARTICIPATION PRINCIPAL-AGENT PRINCIPAL-AGENT PROBLEMS PRIVATE BANKS PROBABILITY PRODUCTIVITY PROFESSIONAL ASSOCIATIONS PROXY PUBLIC FIRMS PUBLIC FUNDS RELIGIOUS GROUPS RESOURCE ALLOCATIONS RESPONSIBILITIES RETURN RETURNS RULE OF LAW SAVINGS SECONDARY SCHOOL SIGNALING EFFECT SOCIAL ASSISTANCE SOCIAL CAPITAL TYPE OF INVESTMENT URBAN AREAS VALUABLE VILLAGE WAGE WORTH
Online Access:	http://documents.worldbank.org/curated/en/2008/02/8995267/participation-productive-associations-signal-trust-creditworthiness-evidence-nicaragua http://hdl.handle.net/10986/6425

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Summary:	This article studies the extent to which participation in productive associations in Nicaragua contributes to increase individuals' access to social programs and credit services. By participating in productive associations, individuals give a good signal to firms and are rewarded with better transactions and more access to the services they provide, ceteris paribus. Estimates using 2005 data indicate that households that participate in productive associations display higher access to credit and to social programs that promote investment. Additionally, participation in productive associations is weakly associated to more favorable credit outcomes among those households that receive loans, such as lower interest rates and a lower probability of wanting more credit than what was accessible to them.

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