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Win Some Lose Some? Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco

  • Manuela Angelucci

    ()

    (Department of Economics, University of Michigan)

  • Dean Karlan

    ()

    (Economic Growth Center, Yale University)

  • Jonathan Zinman

    ()

    (Department of Economics, Dartmouth College)

Registered author(s):

    Theory and evidence have raised concerns that microcredit does more harm than good, particularly when offered at high interest rates. We use a clustered randomized trial, and household surveys of eligible borrowers and their businesses, to estimate impacts from an expansion of group lending at 110% APR by the largest microlender in Mexico. Average effects on a rich set of outcomes measured 18-34 months post-expansion suggest some good and little harm. Other estimators identify heterogeneous treatment effects and effects on outcome distributions, but again yield little support for the hypothesis that microcredit causes harm.

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    File URL: http://www.econ.yale.edu/growth_pdf/cdp1026.pdf
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    Paper provided by Economic Growth Center, Yale University in its series Working Papers with number 1026.

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    Length: 68 pages
    Date of creation: May 2013
    Date of revision:
    Handle: RePEc:egc:wpaper:1026
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    1. Britta Augsburg & Ralph De Haas & Heike Harmgart & Costas Meghir, 2012. "Microfinance at the margin: Experimental evidence from Bosnia and Herzegovina," IFS Working Papers W12/15, Institute for Fiscal Studies.
    2. Attanasio, Orazio & Augsburg, Britta & de Haas, Ralph & Fitzsimons, Emla & Harmgart, Heike, 2014. "Group lending or individual lending? Evidence from a randomised field experiment in Mongolia," Discussion Papers, Research Unit: Economics of Change SP II 2014-303, Social Science Research Center Berlin (WZB).
    3. Lars Ivar Oppedal Berge & Kjetil Bjorvatn & Bertil Tungodden, 2011. "Human and financial capital for microenterprise development: Evidence from a field and lab experiment," CMI Working Papers 1, CMI (Chr. Michelsen Institute), Bergen, Norway.
    4. de Mel, Suresh & McKenzie, David J. & Woodruff, Christopher, 2009. "Measuring microenterprise profits: Must we ask how the sausage is made?," Journal of Development Economics, Elsevier, vol. 88(1), pages 19-31, January.
    5. Stefano DellaVigna, 2007. "Psychology and Economics: Evidence from the Field," NBER Working Papers 13420, National Bureau of Economic Research, Inc.
    6. Dohmen, Thomas J. & Falk, Armin & Huffman, David & Sunde, Uwe & Schupp, Jürgen & Wagner, Gert G., 2011. "Individual risk attitudes: Measurement, determinants, and behavioral consequences," Munich Reprints in Economics 20048, University of Munich, Department of Economics.
    7. Dean Karlan & Martin Valdivia, 2007. "Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions," Working Papers 107, Center for Global Development.
    8. Karna Basu, 2011. "Hyperbolic Discounting and the Sustainability of Rotational Savings Arrangements," American Economic Journal: Microeconomics, American Economic Association, vol. 3(4), pages 143-71, November.
    9. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Jürgen Schupp & Gert G. Wagner, 2011. "Individual Risk Attitudes: Measurement, Determinants, And Behavioral Consequences," Journal of the European Economic Association, European Economic Association, vol. 9(3), pages 522-550, 06.
    10. Angelucci Manuela, 2008. "Love on the Rocks: Domestic Violence and Alcohol Abuse in Rural Mexico," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-43, October.
    11. Suresh de Mel & David McKenzie & Christopher Woodruff, 2008. "Returns to Capital in Microenterprises: Evidence from a Field Experiment," The Quarterly Journal of Economics, MIT Press, vol. 123(4), pages 1329-1372, November.
    12. Michal Bauer & Julie Chytilová & Jonathan Morduch, 2008. "Behavioral Foundations of Microcredit: Experimental and Survey Evidence From Rural India," Working Papers IES 2008/28, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Nov 2008.
    13. Kimball, Miles S & Sahm, Claudia R & Shapiro, Matthew D, 2008. "Imputing Risk Tolerance From Survey Responses," Journal of the American Statistical Association, American Statistical Association, vol. 103(483), pages 1028-1038.
    14. David McKenzie & Christopher Woodruff, 2008. "Experimental Evidence on Returns to Capital and Access to Finance in Mexico," World Bank Economic Review, World Bank Group, vol. 22(3), pages 457-482, November.
    15. Dohmen, Thomas J. & Falk, Armin & Huffman, David & Sunde, Uwe & Schupp, Jürgen & Wagner, Gert G., 2009. "Individual risk attitudes: Measurement, determinants and behavioral consequences," Munich Reprints in Economics 20049, University of Munich, Department of Economics.
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