Researchers conducted a randomized evaluation to test whether a performance-based repayment contract could outperform conventional microcredit contracts, or fixed-payment loans, in improving business outcomes and welfare for micro-distributors in Kenya. Micro-distributors who received flexible financing, especially a hybrid loan that adjusted payments based on earnings, had higher profits than those with fixed-payment loans. They also restocked more often, expanded their sales areas, managed their businesses better, and repaid more.

In Egypt, a sizable portion of the prison population is incarcerated solely for failing to repay private debts, highlighting serious concerns about the social, economic, and legal consequences of debtor imprisonment. Researchers are conducting two randomized evaluations, the first tests the impact of paying off the debts of incarcerated individuals on their post-release outcomes. The second study examines how the threat of imprisonment affects moral hazards and adverse selection in credit markets.