Between Trust and Trade: on Informal Credit Networks in India
Watch the recording here:
Presented by Alp Sungu
University of Pennsylvania
Organized by the Private Sector Development Research Network
hosted by the Wheeler Institute for Business and Development, London Business School (CGD)
Friday, 20th of March 2026, from 9-10am EST
Click here to join virtually the day of the seminar
ABOUT THE SEMINAR
Store credit, a system of deferred payments offered by businesses to customers, is a common trust-based and informal lending method across the developing world. Despite the ubiquity of store credit, little is known about who business owners lend to and why. In this seminar, we document practices around store credit and study its impact on businesses and customers in the context of an informal Indian settlement. First, in a conjoint experiment, we find that store owners are more likely to offer credit to their in-group members, such as customers from their religion or caste. Second, in a field experiment, we find that offering store credit expands businesses’ market access by increasing foot traffic and sales at their stores. Third, we find that subsidizing businesses’ ability to lend to random customers allows them to experiment, learn borrower type, and to increase future lending to both in-group and out-group members, even after the subsidy concludes. Finally, in a survey with customers, we find suggestive evidence that credit helps with consumption smoothing. Together, our results help explain the ubiquity of store credit by highlighting its benefits to both businesses and customers, and underscore the promise of subsidies in increasing learning and lending across social groups in informal credit markets.
Find the working paper here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5392415
ABOUT THE SPEAKER
Alp Sungu, University of Pennsylvania
Alp Sungu is an Assistant Professor in the Operations, Information & Decisions Department at the Wharton School of the University of Pennsylvania . His research focuses on the economic and social impacts of digital technologies, artificial intelligence, and information environments, using large-scale field experiments and empirical methods to study learning, consumer behavior, and development outcomes. His work has been published in leading journals including PNAS, Management Science, Production and Operations Management, and the Review of Industrial Organization, and has received broad recognition in academic and policy circles . Prior to joining Wharton, he earned his PhD in Management Science and Operations from London Business School. He is also a Research Fellow at the IZA Institute of Labor Economics and co-founder of Datum Works, an organization focused on implementing large-scale field experiments in emerging markets .