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Win Some Lose Some? Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco-Working Paper 330

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  • Manuela Angelucci, Dean Karlan, Jonathan Zinman

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Abstract

Theory and evidence have raised concerns that microcredit does more harm than good, particularly when offered at high interest rates. We use a clustered randomized trial, and household surveys of eligible borrowers and their businesses, to estimate impacts from an expansion of group lending at 110% APR by the largest microlender in Mexico. Average effects on a rich set of outcomes measured 18-34 months post-expansion suggest some good and little harm. Other estimators identify heterogeneous treatment effects and effects on outcome distributions, but again yield little support for the hypothesis that microcredit causes harm.

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Bibliographic Info

Paper provided by Center for Global Development in its series Working Papers with number 330.

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Length: 69 pages
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:cgd:wpaper:330

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Web page: http://www.cgdev.org

Related research

Keywords: microcredit; microcredit impact; microentrepreneurship; Compartamos Banco;

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References

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  1. Michal Bauer & Julie Chytilova & Jonathan Morduch, 2012. "Behavioral Foundations of Microcredit: Experimental and Survey Evidence from Rural India," American Economic Review, American Economic Association, vol. 102(2), pages 1118-39, April.
  2. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2007. "Returns to capital in microenterprises : evidence from a field experiment," Policy Research Working Paper Series 4230, The World Bank.
  3. Dean Karlan & Martin Valdivia, 2007. "Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions," Working Papers 107, Center for Global Development.
  4. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Jürgen Schupp & Gert G. Wagner, 2011. "Individual Risk Attitudes: Measurement, Determinants, And Behavioral Consequences," Journal of the European Economic Association, European Economic Association, vol. 9(3), pages 522-550, 06.
  5. Attanasio, Orazio & Augsburg, Britta & de Haas, Ralph & Fitzsimons, Emla & Harmgart, Heike, 2014. "Group lending or individual lending? Evidence from a randomised field experiment in Mongolia," Discussion Papers, Research Unit: Economics of Change SP II 2014-303, Social Science Research Center Berlin (WZB).
  6. Karna Basu, 2011. "Hyperbolic Discounting and the Sustainability of Rotational Savings Arrangements," American Economic Journal: Microeconomics, American Economic Association, vol. 3(4), pages 143-71, November.
  7. Angelucci Manuela, 2008. "Love on the Rocks: Domestic Violence and Alcohol Abuse in Rural Mexico," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-43, October.
  8. Lars Ivar Oppedal Berge & Kjetil Bjorvatn & Bertil Tungodden, 2011. "Human and financial capital for microenterprise development: Evidence from a field and lab experiment," CMI Working Papers 1, CMI (Chr. Michelsen Institute), Bergen, Norway.
  9. Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-72, June.
  10. de Mel, Suresh & McKenzie, David J. & Woodruff, Christopher, 2009. "Measuring microenterprise profits: Must we ask how the sausage is made?," Journal of Development Economics, Elsevier, vol. 88(1), pages 19-31, January.
  11. Kimball, Miles S & Sahm, Claudia R & Shapiro, Matthew D, 2008. "Imputing Risk Tolerance From Survey Responses," Journal of the American Statistical Association, American Statistical Association, vol. 103(483), pages 1028-1038.
  12. David McKenzie & Christopher Woodruff, 2008. "Experimental Evidence on Returns to Capital and Access to Finance in Mexico," World Bank Economic Review, World Bank Group, vol. 22(3), pages 457-482, November.
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Cited by:
  1. Jaikishan Desai & Kristin Johnson & Alessandro Tarozzi, 2013. "On the Impact of Microcredit: Evidence from a Randomized Intervention in Rural Ethiopia," Working Papers 741, Barcelona Graduate School of Economics.
  2. Felipe Kast & Dina Pomeranz, 2013. "Saving More to Borrow Less: Experimental Evidence from Access to Formal Savings Accounts in Chile," Harvard Business School Working Papers 14-001, Harvard Business School, revised Jun 2014.
  3. Dean Karlan & Adam Osman & Jonathan Zinman, 2013. "Follow the Money: Methods for Identifying Consumption and Investment Responses to a Liquidity Shock," Working Papers 1034, Economic Growth Center, Yale University.
  4. Karlan, Dean S. & Zinman, Jonathan, 2013. "Long-Run Price Elasticities of Demand for Credit: Evidence from a Countrywide Field Experiment in Mexico," CEPR Discussion Papers 9503, C.E.P.R. Discussion Papers.

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