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When Microenterprises Grow, Are Consumers Better Off? Evidence from Large Loans to Microenterprises in Chile

Author

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  • Karlan, Dean
  • Rigol, Natalia
  • Roth, Benjamin N.

Abstract

Evaluations of microenterprise credit typically measure effects only on borrowing firms. But what about their customers? If microenterprises sell relatively undifferentiated goods and services, as is often hypothesized, credit may simply reallocate sales across firms and create little consumer benefit. In a randomized controlled trial in Chile, large loans increased treated firms’ profits by USD 292 per month, a 13.4% increase. Customer survey data indicate even larger benefits for customers: a gain of USD 494 per month in consumer surplus. Furthermore, using a sample of more than 125,000 non-treated firms operating in the same markets, we find little evidence of business stealing. The welfare gains from credit expansion thus extend well beyond the borrowers themselves.

Suggested Citation

  • Karlan, Dean & Rigol, Natalia & Roth, Benjamin N., 2026. "When Microenterprises Grow, Are Consumers Better Off? Evidence from Large Loans to Microenterprises in Chile," CEPR Discussion Papers 21897, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:21897
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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