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Re-evaluating Microfinance: Evidence from Propensity Score Matching

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  • Inna Cintina
  • Inessa Love

Abstract

We evaluate effectiveness of microfinance using Propensity Score Matching (PSM) method applied to data collected in a recent randomized control trial. This method allows us to answer an additional set of questions not answered by the original study and provide more nuanced evidence by comparing Microfinance Institution (MFI) borrowers to those without any loans and those with prior loans from other sources. We argue that this unique setting with two comparison groups allows us to shed light on the unobservable entrepreneurial spirit bias and provides upper and lower bounds on the true microfinance impact. Our results suggest that microfinance can make a modest difference for some households in several expenditure categories.

Suggested Citation

  • Inna Cintina & Inessa Love, 2019. "Re-evaluating Microfinance: Evidence from Propensity Score Matching," The World Bank Economic Review, World Bank, vol. 33(1), pages 95-115.
    • Handle: RePEc:oup:wbecrv:v:33:y:2019:i:1:p:95-115.
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    File URL: http://hdl.handle.net/10.1093/wber/lhw069
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    Cited by:

    1. Rafael Goldszmidt & Patrick Behr & Cesar Zucco & Anna-Katharina Lenz & Lauro Gonzalez & Martin Valdivia, 2022. "Microcredit Impacts: Evidence from a Large-Scale Observational Study in Brazil," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(4), pages 1940-1966, August.
    2. Sadia Hussain & Hamna Ahmed, 2019. "The role of bundling in promoting sustainability of health insurance: evidence from Pakistan," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 44(3), pages 503-526, July.
    3. Lars Ivar Oppedal Berge & Armando José Garcia Pires, 2020. "Gender, formality, and entrepreneurial success," Small Business Economics, Springer, vol. 55(4), pages 881-900, December.

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