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Ali Norton

There were many interesting components in this paper. One of which was the notion that access to credit changes how a household spends rather than how much they spend. The statistic presented, that ~13-15% of U.S. business borrowers default on loans, compared to ~2-5% of microcredit borrowers in developing countries who default on loans surprised me. The idea that business owners who had a grace period invested 6% more of their loans in their businesses than borrowers who did not receive a grace period also surprised me. I would have expected investment from those borrowers receiving a grace period to be less than borrowers who did not receive a grace period, thinking that if payment was delayed, a borrow may be more inclined to consume and feel less imminent responsibility for the loan; however, this result showed that borrowers, and particularly the borrowers surveyed, were very savy and responsible with their loans, and optimized their credit to the benefit of their business.

Additionally, the discussion of text reminders demonstrated some of the neuroeconomics of saving. The notion that receiving a text message increased savings by 16% when the reminder was about a purchase goal was really interesting, as this concept can be implemented across different savings and consumption products in both the developing and developed world. For example, I get a text a few days before my automatic car insurance payment is deducted from my account. I’m sure the company uses this to remind customers that the payment will occur and to ensure there will be funds in the account when the deduction is drawn. The use of text reminders is a simple and modern way of holding savers (and consumers) accountable. Another means for holding savers accountable that the article discussed was through account labeling. I found this concept really interesting as well. If people label their spending, they may be more likely to protect funds allocated for different purposes. These two examples prompted me to think it would be really interesting to understand more about the neuroeconomics behind saving and spending and what gives us incentive to

Lauren Howard

This article was fascinating to me because of the evidence offered by the authors. Though they began by curbing the reader's expectations of microfinance, they went on to show that microfinance is more nuanced than we had previously believed. By highlighting the distinctions between three arms of microfinance: credit, savings, and insurance, the authors successfully digested the evidence from the variety of randomized evaluations that they analyze. The article takes our common assumptions about the goals and effective mechanisms of microfinance and walks through each one, offering evidence for and against, ultimately helping the reader understand the most effective mechanism for a wide variety of goals in development.

I think the most important conclusion the authors draw is that "a one-size-fits-all product will not bring benefit to the borrowers or profit to the providers." Even the most effective studies they take into consideration are limited in scope. However, instead of viewing this limitation as a setback, I believe that these studies can guide us in developing initial policy at a local level.

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