Instant Loans Can Lift Subjective Well-Being: A Randomized Evaluation of Digital Credit in Nigeria

Digital loans have exploded in popularity across low and middle income countries, providing short term, high interest credit via mobile phones. This paper reports the results of a randomized evaluation of a digital loan product in Nigeria. Being randomly approved for digital credit (irrespective of credit score) substantially increases subjective well-being after an average of three months. For those who are approved, being randomly offered larger loans has an insignificant effect. Neither treatment significantly impacts other measures of welfare. We rule out large short-term impacts either positive or negative: on income and expenditures, resilience, and women's economic empowerment.