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Expanding Microenterprise Credit Access: Randomized Supply Decisions to Estimate the Impacts in Manila

Author

Listed:
  • Karlan, Dean

    (Yale University and Innovations for Poverty Action)

  • Zinman, Jonathan

    (Dartmouth College and Innovations for Poverty Action)

Abstract

Microcredit seeks to promote business growth and improve well-being by expanding access to credit. We use a field experiment and follow-up survey to measure impacts of a credit expansion for microentrepreneurs in Manila. The effects are diffuse, heterogeneous, and surprising. Although there is some evidence that profits increase, the mechanism seems to be that businesses shrink by shedding unproductive workers. Overall, borrowing households substitute away from labor (in both family and outside businesses), and into education. We also find substitution away from formal insurance, along with increases in access to informal risk-sharing mechanisms. Our treatment effects are stronger for groups that are not typically targeted by microlenders: male and higher-income entrepreneurs. In all, our results suggest that microcredit works broadly through risk management and investment at the household level, rather than directly through the targeted businesses.

Suggested Citation

  • Karlan, Dean & Zinman, Jonathan, 2009. "Expanding Microenterprise Credit Access: Randomized Supply Decisions to Estimate the Impacts in Manila," Working Papers 68, Yale University, Department of Economics.
  • Handle: RePEc:ecl:yaleco:68
    as

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    File URL: http://economics.yale.edu/sites/default/files/files/Working-Papers/wp000/ddp0068.pdf
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The Mothership of Microfinance Impact Studies has landed
      by philmader in governance across borders on 2011-08-19 20:48:30

    Citations

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    Cited by:

    1. Cyril Fouillet & Marek Hudon & Barbara Harriss-White & James Copestake, 2013. "Microfinance Studies: Introduction and Overview," Oxford Development Studies, Taylor & Francis Journals, vol. 41(sup1), pages 1-16, August.
    2. Byson Beracah Majanga, 2016. "The Journey to Financial Inclusion in Malawi- What Does the Future Hold?," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 2(9), pages 169-175, 09-2016.
    3. repec:eee:labeco:v:45:y:2017:i:c:p:116-130 is not listed on IDEAS
    4. Islam, Asadul, 2015. "Heterogeneous effects of microcredit: Evidence from large-scale programs in Bangladesh," Journal of Asian Economics, Elsevier, vol. 37(C), pages 48-58.
    5. Maitra, Pushkar & Mani, Subha, 2017. "Learning and earning: Evidence from a randomized evaluation in India," Labour Economics, Elsevier, vol. 45(C), pages 116-130.
    6. Linardi, Sera & Tanaka, Tomomi, 2013. "Competition as a savings incentive: A field experiment at a homeless shelter," Journal of Economic Behavior & Organization, Elsevier, vol. 95(C), pages 240-251.
    7. Schicks, Jessica, 2014. "Over-Indebtedness in Microfinance – An Empirical Analysis of Related Factors on the Borrower Level," World Development, Elsevier, vol. 54(C), pages 301-324.
    8. Xavier Giné & Pamela Jakiela & Dean Karlan & Jonathan Morduch, 2010. "Microfinance Games," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 60-95, July.
    9. repec:wsi:jdexxx:v:16:y:2011:i:04:n:s1084946711001951 is not listed on IDEAS
    10. Xu, Lisa & Zia, Bilal, 2012. "Financial literacy around the world : an overview of the evidence with practical suggestions for the way forward," Policy Research Working Paper Series 6107, The World Bank.
    11. Hammler, Katharina, 2011. "Mikrokredite: Eine kritische empirische Bestandsaufnahme," Briefing Papers 6, Österreichische Forschungsstiftung für Internationale Entwicklung (ÖFSE) / Austrian Foundation for Development Research.
    12. Antonio Andreoni, 2013. "Microfinance," Chapters,in: Handbook on the Economics of Reciprocity and Social Enterprise, chapter 22, pages 227-237 Edward Elgar Publishing.
    13. Jessica Schicks, 2013. "The Definition and Causes of Microfinance Over-Indebtedness: A Customer Protection Point of View," Oxford Development Studies, Taylor & Francis Journals, vol. 41(sup1), pages 95-116, August.
    14. repec:wbk:wbpubs:12550 is not listed on IDEAS
    15. Asad K. Ghalib & Issam Malki & Katsushi S. Imai, 2015. "Microfinance and Household Poverty Reduction: Empirical Evidence from Rural Pakistan," Oxford Development Studies, Taylor & Francis Journals, vol. 43(1), pages 84-104, March.
    16. Hosaki Kono, 2011. "Economic Integration and Poverty," Chapters,in: The Economics of East Asian Integration, chapter 16 Edward Elgar Publishing.

    More about this item

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • D20 - Microeconomics - - Production and Organizations - - - General
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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