Impact of Microfinance on Rural Households in the Philippines
AbstractThis paper reports on the impact evaluation study of the Rural Microenterprise Finance Project (RMFP) in the Philippines. RMFP aimed to support efforts of the Government of the Philippines to strengthen rural financial institutions by assisting organizations that employed the Grameen Bank Approach (GBA) in providing credit to the poor. The project was implemented by the People’s Credit and Finance Corporation (PCFC) and funded by the Asian Development Bank. The evaluation uses a quasi-experimental design with incoming clients of randomly selected participating microfinance institutions as the comparison group. An important innovation in the study is the inclusion of the appropriate number of former clients among the treatment group. Qualified nonparticipating households provide the control for area effects. The impact estimation uses the difference-in-difference estimation technique which effectively controls for the known sources of biases namely: nonrandom program participation (sample selection), nonrandom program placement, and nonrandom drop-out. The results led the authors to recommend that for microfinance programs to be effective as a poverty-alleviation tool there is a need to review and constantly monitor the effectiveness of the targeting procedures. In addition, it was pointed out that there may be a need to assist the poor in selecting appropriate projects that not only ensure loan repayment but also generate ample profit as well.
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Bibliographic InfoPaper provided by Philippine Institute for Development Studies in its series Discussion Papers with number DP 2008-05.
Date of creation: 2008
Date of revision:
microfinance; Philippines; impact evaluation; quasi-experimental design;
Other versions of this item:
- Toshio Kondo & Aniceto Orbeta Jr. & Clarence Dingcong & Christine Infantado, 2008. "Impact of Microfinance on Rural Households in the Philippines," Development Economics Working Papers 22639, East Asian Bureau of Economic Research.
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- D14 - Microeconomics - - Household Behavior - - - Personal Finance
- D10 - Microeconomics - - Household Behavior - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-05-17 (All new papers)
- NEP-DEV-2008-05-17 (Development)
- NEP-SEA-2008-05-17 (South East Asia)
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