Expanding Microenterprise Credit Access: Using Randomized Supply Decisions to Estimate the Impacts in Manila
AbstractMicrocredit seeks to promote business growth and improve well-being by expanding access to credit. We use a field experiment and follow-up survey to measure impacts of a credit expansion for microentrepreneurs in Manila. The effects are diffuse, heterogeneous, and surprising. Although there is some evidence that profits increase, the mechanism seems to be that businesses shrink by shedding unproductive workers. Overall, borrowing households substitute away from labor (in both family and outside businesses), and into education. We also find substitution away from formal insurance, along with increases in access to informal risk-sharing mechanisms. Our treatment effects are stronger for groups that are not typically targeted by microlenders: male and higher-income entrepreneurs. In all, our results suggest that microcredit works broadly through risk management and investment at the household level, rather than directly through the targeted businesses.
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Bibliographic InfoPaper provided by Economic Growth Center, Yale University in its series Working Papers with number 976.
Length: 35 pages
Date of creation: Jul 2009
Date of revision:
microfinance; microcredit; microentreprenuership; risk sharing; formal and informal finance;
Other versions of this item:
- Karlan, Dean S. & Zinman, Jonathan, 2009. "Expanding Microenterprise Credit Access: Using Randomized Supply Decisions to Estimate the Impacts in Manila," CEPR Discussion Papers 7396, C.E.P.R. Discussion Papers.
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- D1 - Microeconomics - - Household Behavior
- D2 - Microeconomics - - Production and Organizations
- G2 - Financial Economics - - Financial Institutions and Services
This paper has been announced in the following NEP Reports:
- NEP-AGR-2009-08-16 (Agricultural Economics)
- NEP-ALL-2009-08-16 (All new papers)
- NEP-DEV-2009-08-16 (Development)
- NEP-ENT-2009-08-16 (Entrepreneurship)
- NEP-EXP-2009-08-16 (Experimental Economics)
- NEP-MFD-2009-08-16 (Microfinance)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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