Demasking the impact of microfinance
AbstractWe reconsider data from a randomized control trial study in India. The data reveal the impact of a microloan program. We extend the often used randomized impact evaluation and di¤erence-in-di¤erence approach by quantile regression and the consideration of the quantile treatment effects. The use of additional, more advanced, evaluation methods allows a more detailed consideration of borrowers at the lower and at the upper end of the wealth distribution. We find a strong negative and signi.cant time-trend. Furthermore, we observe a negative impact of the provi- sion of microfinance loans such that the overall impact is even more negative. This is particularly well seen for entrepreneurs in the lower and in the higher quantiles. As we learn that poor entrepreneurs use microloans for consumption, we doubt that micro.nance is the right instrument for them. The data suggest that providing microloans for average entrepreneurs, who can hire very poor entrepreneurs, might be an effective solution for that dilemma.
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Bibliographic InfoPaper provided by Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz in its series Working Papers with number 1115.
Length: 33 pages
Date of creation: 09 Nov 2011
Date of revision: 09 Nov 2011
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Find related papers by JEL classification:
- E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-01-25 (All new papers)
- NEP-DEV-2012-01-25 (Development)
- NEP-ENT-2012-01-25 (Entrepreneurship)
- NEP-MFD-2012-01-25 (Microfinance)
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