Lying About Borrowing

This paper explores the extent and implications of respondent mis-reports of recent borrowing in a sample of borderline consumer loan applicants in South Africa.

Prior research suggests that survey respondents are likely to under-report activities viewed as socially undesirable. The study measures under-reporting by comparing survey self-reports with administrative data in a setting where stigma and suspicion is attached to borrowing. Study findings indicate that:

• Nearly 50% of recent borrowers do not report their high-interest consumer loans;
• Under-reporting appears to be correlated with gender;
• 62% of women, when interviewed by men, under-report whereas 42 percent of women interviewed by women under-report;
• 40% of men under-report, irrespective of the gender of the interviewer;
• Social stigma attached to borrowing is more severe for women and can be mitigated by assigning female surveyors to interview female borrowers.

Study results cast doubt on the feasibility of obtaining estimates of the impacts of borrowing using self-reported data. As alternatives, the study recommends using administrative data on lending and where feasible, the use of credit bureau data.