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Win Some Lose Some? Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco

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  • Angelucci, Manuela

    (University of Michigan)

  • Karlan, Dean

    (Yale University)

  • Zinman, Jonathan

    (Dartmouth College)

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 Yale University, Department of Economics in its series Working Papers with number 117.

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Date of creation: May 2013
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Handle: RePEc:ecl:yaleco:117

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  1. 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.
  2. Karna Basu, 2011. "Hyperbolic Discounting and the Sustainability of Rotational Savings Arrangements," American Economic Journal: Microeconomics, American Economic Association, American Economic Association, vol. 3(4), pages 143-71, November.
  3. Dohmen Thomas & Falk Armin & Huffman David & Sunde Uwe & Schupp Jürgen & Wagner Gert G., 2009. "Individual Risk Attitudes: Measurement, Determinants and Behavioral Consequences," Research Memorandum 039, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  4. 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, American Statistical Association, vol. 103(483), pages 1028-1038.
  5. Augsburg, Britta & de Haas, Ralph & Harmgart, Heike & Meghir, Costas, 2014. "Microfinance at the margin: Experimental evidence from Bosnia and Herzegovina," Discussion Papers, Research Unit: Economics of Change SP II 2014-304, Social Science Research Center Berlin (WZB).
  6. 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, Elsevier, vol. 88(1), pages 19-31, January.
  7. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2007. "Returns to Capital in Microenterprises: Evidence from a Field Experiment," IZA Discussion Papers 2934, Institute for the Study of Labor (IZA).
  8. Dean Karlan & Martin Valdivia, 2007. "Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions," Working Papers, Center for Global Development 107, Center for Global Development.
  9. Michal Bauer & Julie Chytilová & Jonathan Morduch, 2008. "Behavioral Foundations of Microcredit: Experimental and Survey Evidence From Rural India," Working Papers IES, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies 2008/28, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Nov 2008.
  10. Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-72, June.
  11. Orazio Attanasio & Britta Augsburg & Ralph de Haas & Emla Fitzsimons & Heike Harmgart, 2011. "Group lending or individual lending? Evidence from a randomised field experiment in Mongolia," IFS Working Papers, Institute for Fiscal Studies W11/20, Institute for Fiscal Studies.
  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, World Bank Group, vol. 22(3), pages 457-482, November.
  13. 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.
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Cited by:
  1. Markus Jäntti & Ravi Kanbur & Jukka Pirttilä & Dean Karlan & Aishwarya Lakshmi Ratan & Jonathan Zinman, 2014. "Savings by and for the Poor: A Research Review and Agenda," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(1), pages 36-78, 03.
  2. Roodman, David & Morduch, Jonathan, 2013. "The Impact of Microcredit on the Poor in Bangladesh: Revisiting the Evidence," CEI Working Paper Series, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University 2013-02, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
  3. 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.
  4. Dean Karlan & Adam Osman & Jonathan Zinman, 2013. "Follow the Money: Methods for Identifying Consumption and Investment Responses to a Liquidity Shock," NBER Working Papers 19696, National Bureau of Economic Research, Inc.
  5. Dean Karlan & Jonathan Zinman, 2013. "Long-Run Price Elasticities of Demand for Credit: Evidence from a Countrywide Field Experiment in Mexico," NBER Working Papers 19106, National Bureau of Economic Research, Inc.
  6. Dean Karlan, Aishwarya Lakshmi Ratan, Jonathan Zinman, 2013. "Savings by and for the Poor: A Research Review and Agenda-Working Paper 346," Working Papers, Center for Global Development 346, Center for Global Development.
  7. James Fenske & Achyuta Adhvaryu & Anant Nyshadham, 2014. "Early Life Circumstance and Adult Mental Health," Economics Series Working Papers 698, University of Oxford, Department of Economics.
  8. Felipe Kast & Dina Pomeranz, 2014. "Saving More to Borrow Less: Experimental Evidence from Access to Formal Savings Accounts in Chile," NBER Working Papers 20239, National Bureau of Economic Research, Inc.
  9. Dean Karlan, Jonathan Zinman, 2013. "Long-Run Price Elasticities of Demand for Credit: Evidence from a Countrywide Field Experiment in Mexico-Working Paper 331," Working Papers, Center for Global Development 331, Center for Global Development.

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