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On the impact of microcredit: Evidence from a randomized intervention in rural Ethiopia

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Abstract

We use data from a randomized controlled trial conducted in 2003-2006 in rural Amhara and Oromiya (Ethiopia) to study the impacts of the introduction of microfinance in treated communities. We document that borrowing increased substantially in locations where the programs started their operations, but we find mixed evidence of improvements in a number of socio-economic outcomes, including income from agriculture, animal husbandry, non-farm self-employment, schooling and indicators of women's empowerment.

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  • Alessandro Tarozzi & Jaikishan Desai & Kristin Johnson, 2013. "On the impact of microcredit: Evidence from a randomized intervention in rural Ethiopia," Economics Working Papers 1407, Department of Economics and Business, Universitat Pompeu Fabra.
  • Handle: RePEc:upf:upfgen:1407
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    1. 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.
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    5. Angelucci, Manuela & Karlan, Dean & Zinman, Jonathan, 2013. "Win Some Lose Some? Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco," Working Papers 117, Yale University, Department of Economics.
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    7. Jonathan Morduch, 1999. "The Microfinance Promise," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1569-1614, December.
    8. 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," IFS Working Papers W11/20, Institute for Fiscal Studies.
    9. Wydick, Bruce, 1999. "The Effect of Microenterprise Lending on Child Schooling in Guatemala," Economic Development and Cultural Change, University of Chicago Press, vol. 47(4), pages 853-869, July.
    10. Joseph P. Kaboski & Robert M. Townsend, 2012. "The Impact of Credit on Village Economies," American Economic Journal: Applied Economics, American Economic Association, vol. 4(2), pages 98-133, April.
    11. Manuela Angelucci, Dean Karlan, Jonathan Zinman, 2013. "Win Some Lose Some? Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco-Working Paper 330," Working Papers 330, Center for Global Development.
    12. Abhijit Banerjee & Esther Duflo & Rachel Glennerster & Cynthia Kinnan, 2015. "The Miracle of Microfinance? Evidence from a Randomized Evaluation," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 22-53, January.
    13. Augsburg, Britta & de Haas, Ralph & Harmgart, Heike & Meghir, Costas, 2014. "Microfinance at the margin: Experimental evidence from Bosnia and Herzegovina," Discussion Papers, Research Unit: Economics of Change SP II 2014-304, Social Science Research Center Berlin (WZB).
    14. Jaikishan Desai & Alessandro Tarozzi, 2011. "Microcredit, Family Planning Programs, and Contraceptive Behavior: Evidence From a Field Experiment in Ethiopia," Demography, Springer;Population Association of America (PAA), vol. 48(2), pages 749-782, May.
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    Cited by:

    1. Bruno Crépon & Florencia Devoto & Esther Duflo & William Parienté, 2015. "Estimating the Impact of Microcredit on Those Who Take It Up: Evidence from a Randomized Experiment in Morocco," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 123-150, January.
    2. Karlan, Dean S. & Osman, Adam & Zinman, Jonathan, 2013. "Follow the Money: Methods for Identifying Consumption and Investment Responses to a Liquidity Shock," CEPR Discussion Papers 9773, C.E.P.R. Discussion Papers.
    3. Manuela Angelucci & Dean Karlan & Jonathan Zinman, 2015. "Microcredit Impacts: Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 151-182, January.
    4. Fiala, Nathan., 2015. "Access to finance and enterprise growth : evidence from an experiment in Uganda," ILO Working Papers 994874063402676, International Labour Organization.
    5. Mahreen Mahmud, 2015. "Act Now: Microcredit with Voluntary Contributions and Zero Interest Rate - Evidence from Pakistan," Studies in Economics 1513, School of Economics, University of Kent.
    6. Fiala, Nathan, 2014. "Economic Consequences of Forced Displacement," Working Papers 29, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    7. Grimm, Michael & Paffhausen, Anna Luisa, 2015. "Do interventions targeted at micro-entrepreneurs and small and medium-sized firms create jobs? A systematic review of the evidence for low and middle income countries," Labour Economics, Elsevier, vol. 32(C), pages 67-85.
    8. Inna Cintina & Inessa Love, 2014. "The Miracle of Microfinance Revisited: Evidence from Propensity Score Matching," Working Papers 201424, University of Hawaii at Manoa, Department of Economics.
    9. Beck, Erin, 2016. "Repopulating Development: An Agent-Based Approach to Studying Development Interventions," World Development, Elsevier, vol. 80(C), pages 19-32.

    More about this item

    Keywords

    Microcredit; Cluster Randomized Controlled Trial; Ethiopia;

    JEL classification:

    • 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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