Mobile Internet, Collateral, and Banking

Download or read book Mobile Internet, Collateral, and Banking written by Angelo D’Andrea and published by International Monetary Fund. This book was released on 2024-03-29 with total page 69 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.