Credit access and life satisfaction: evaluating the nonmonetary effects of micro finance

Microfinance Institutions (MFIs) are used to claim that their impact goes beyond money since rescuing from exclusion uncollateralized poor borrowers significantly affects their dignity, self-esteem, social recognition, future economic perspectives and, through it, life satisfaction. Our article aims to verify the validity of this claim by evaluating whether access to microfinance loans has significant direct impact on life satisfaction beyond its indirect impact via current income changes. Empirical findings on a sample of poor borrowers in the suburbs of Buenos Aires show that, after controlling for survivorship, selection and interview bias, microfinance membership has a significant and positive effect on life satisfaction.