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Microfinance at the margin: Experimental evidence from Bosnia and Herzegovina

  • Britta Augsburg

    ()

    (Institute for Fiscal Studies)

  • Ralph De Haas
  • Heike Harmgart

    ()

    (Institute for Fiscal Studies)

  • Costas Meghir

    (Institute for Fiscal Studies and Yale University)

We use an RCT to analyse the impact of microcredit on poverty reduction in Bosnia. The study population are loan applicants that would normally have just been rejected based on regular screening. We find that access to credit allowed borrowers to start and expand small-scale businesses. Households that already had a business and where the borrower had more education ran down their savings, presumably to complement the loan and to achieve the minimum amount necessary to expand their business. In less-educated households, however, consumption went down. A key new result is that there was a substantial increase in the labor supply of young adults (16-19 year olds). This was accompanied by a reduction in school attendance.

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Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W12/15.

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Date of creation: Sep 2012
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Handle: RePEc:ifs:ifsewp:12/15
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  1. Dean Karlan & Jonathan Zinman, 2007. "Expanding Credit Access: Using Randomized Supply Decisions to Estimate the Impacts," Working Papers 108, Center for Global Development.
  2. Ghatak, M. & Guinnane, T.W., 1998. "The Economics of Lending with Joint Liability: Theory and Practice," Papers 791, Yale - Economic Growth Center.
  3. Orazio Attanasio & Britta Augsburg & Ralph De Haas & Emla Fitzsimons & Heike Harmgart, 2011. "Group lending or individual lending? Evidence from a randomised field experiment in Mongolia," Working Papers 136, European Bank for Reconstruction and Development, Office of the Chief Economist.
  4. Abhijit Banerjee & Sendhil Mullainathan, 2010. "The Shape of Temptation: Implications for the Economic Lives of the Poor," Working Papers id:2484, eSocialSciences.
  5. Marcel Fafchamps & Simon Quinn & David McKenzie and Christopher Woodruff, 2011. "When is capital enough to get female microenterprises growing? Evidence from a randomized experiment in Ghana," Economics Series Working Papers WPS/2011-11, University of Oxford, Department of Economics.
  6. Acemoglu, D. & Pischke, J.S., 1997. "The Structure of Wages and Investment in General Training," Working papers 97-24, Massachusetts Institute of Technology (MIT), Department of Economics.
  7. Jacoby, Hanan G & Skoufias, Emmanuel, 1997. "Risk, Financial Markets, and Human Capital in a Developing Country," Review of Economic Studies, Wiley Blackwell, vol. 64(3), pages 311-35, July.
  8. Bruhn, Miriam & Zia, Bilal, 2011. "Stimulating managerial capital in emerging markets : the impact of business and financial literacy for young entrepreneurs," Policy Research Working Paper Series 5642, The World Bank.
  9. Feigenberg, Benjamin & Field, Erica M. & Pande, Rohini, 2010. "Building Social Capital through Microfinance," Working Paper Series rwp10-019, Harvard University, John F. Kennedy School of Government.
  10. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2008. "Are Women More Credit Constrained? Experimental Evidence on Gender and Microenterprise Returns," IZA Discussion Papers 3743, Institute for the Study of Labor (IZA).
  11. Jacoby, Hanan G, 1994. "Borrowing Constraints and Progress through School: Evidence from Peru," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 151-60, February.
  12. Nidhiya Menon, 2010. "Investment credit and child labour," Applied Economics, Taylor & Francis Journals, vol. 42(12), pages 1461-1479.
  13. Mark M. Pitt & Shahidur R. Khandker, 1998. "The Impact of Group-Based Credit Programs on Poor Households in Bangladesh: Does the Gender of Participants Matter?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 958-996, October.
  14. Joseph G. Altonji, 2005. "Employer Learning, Statistical Discrimination and Occupational Attainment," American Economic Review, American Economic Association, vol. 95(2), pages 112-117, May.
  15. Beegle, Kathleen & Dehejia, Rajeev H. & Gatti, Roberta, 2006. "Child labor and agricultural shocks," Journal of Development Economics, Elsevier, vol. 81(1), pages 80-96, October.
  16. Karlan, Dean & Gine, Xavier, 2009. "Group versus Individual Liability: Long Term Evidence from Philippine Microcredit Lending Groups," Working Papers 61, Yale University, Department of Economics.
  17. Demirguc-Kunt, Asli & Klapper, Leora F. & Panos, Georgios A., 2009. "Entrepreneurship in post-conflict transition : the role of informality and access to finance," Policy Research Working Paper Series 4935, The World Bank.
  18. Joseph P. Kaboski & Robert M. Townsend, 2005. "Policies and Impact: An Analysis of Village-Level Microfinance Institutions," Journal of the European Economic Association, MIT Press, vol. 3(1), pages 1-50, 03.
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