Funded by IPA’s Consumer Protection Research Initiative, researchers are conducting a randomized pilot evaluation to assess whether access to simplified, personalized, comparative loan information helps prospective borrowers in Uganda search more effectively and access loans on more favorable terms. Results will be available in 2026.

The Challenge

In low- and middle-income countries, many consumers seeking credit face significant barriers to finding competitive loan terms. Financial institutions often present loan costs in ways that can obscure the true price of borrowing, including through complex fee structures and varying voluntary disclosure of borrowing costs, as suggested by previous IPA research in Uganda.¹ This can make it difficult for consumers to compare lenders and loan products, and to identify lower-cost options that fit their borrowing needs.

Evidence from some contexts suggests that borrowers may underestimate how much loan costs vary across lenders, which can reduce their motivation to search for better offers.² However, there is still limited evidence on how microentrepreneurs and other small-scale borrowers search for credit in urban low- and middle-income country settings, and on whether simple, personalized comparison tools can help them make more informed borrowing decisions. These information frictions may limit price competition among lenders and contribute to the high cost of borrowing, which remains an important policy concern in Uganda.

The Evaluation

Researchers are conducting a randomized pilot evaluation to measure whether and how access to simplified, personalized, comparative loan information affects prospective borrowers’ search and borrowing behavior, and whether it helps them access loans on more favorable terms. The study involves around 50 local council zones in Kampala, with an expected average of seven prospective borrowers per zone.

Zones are randomly assigned to two groups:

• Comparative loan information group: Prospective borrowers receive access to a loan comparison tool showing the total cost of credit for up to five of the cheapest eligible products, along with lender names, branch locations, and contact details.
• Comparison group: Prospective borrowers complete the study without exposure to the comparison tool.

IPA Uganda will collect data on whether participants ultimately take out a loan, which lender and product they choose, the loan amount, and the total cost of credit. Results from the pilot will inform the design of a future full-scale randomized evaluation.

Results

Results will be available in 2026.

Sources

^1. Giné, X., & Mazer, R. K. Financial (dis-) information: Evidence from a multi-country audit study, Journal of Public Economics, Volume 208, 2022 104618. https://doi.org/10.1016/j.jpubeco.2022.104618

^2. Berwart, Erik, Sean Higgins, Sheisha Kulkarni, and Santiago Truffa. Search and Negotiation with Biased Beliefs in Consumer Credit Markets. Tech. rep, 2025.