The supply- and demand-side impacts of credit market information

We utilize a unique pair of experiments to isolate the ways in which reductions in asymmetric information alter credit market outcomes. A Guatemalan microfinance lender gradually started using a credit bureau across its branches without the knowledge of borrowers. One year later, we ran a large randomized credit information course that described the existence and workings of the bureau to the clients of this lender. This pairing of natural and randomized experiments allows us to separately identify how new information enters on the supply and the demand sides of the market. Our results indicate that credit bureaus generate large efficiency gains for the lender, and that these gains are augmented when borrowers understand the rules of the game. Credit bureaus reward good borrowers but penalize weaker ones, increasing economic differentiation