A New Approach to Lending in Low- and Middle-Income Countries | NBER
“While microfinance has not broadly succeeded in relaxing credit constraints for the poor in low- and middle-income countries, a new form of credit using “digital collateral” is effective, a study by Paul Gertler, Brett Green, and Catherine Wolfram finds.
Digital collateral allows a person to borrow in order to buy an asset, such as a smartphone, and use the phone to collateralize the loan. If the borrower fails to make payments, the lender can lock the phone remotely until payments are resumed.”