Economics & Finance / Finance & Investment / Banking & Credit

How a Simple Loan Change Boosted Credit Access from 2.4% to 41.9% in Kenya

William Jack, Michael Kremer, Joost de Laat, Tavneet Suri

In rural Kenya, most farmers couldn’t get loans because banks demanded full cash collateral. But what if they could use the asset they were buying—like a water tank—as collateral? A field experiment by William Jack (Georgetown), Michael Kremer (Harvard), Joost de Laat (Utrecht), and Tavneet Suri (MIT) tested this shift. The result? Loan participation skyrocketed from 2.4% to 41.9%. Default rates stayed below 1%, proving the real barrier was not risk but rigid requirements. This video unpacks the study's findings on adverse selection, social welfare, and how smarter lending can transform lives—reducing child labor, boosting school attendance, and improving water access. Watch to see why the old system was broken and how a simple fix could unlock credit for millions.