IDEAS home Printed from https://ideas.repec.org/p/zbw/wzbeoc/spii2014304.html
   My bibliography  Save this paper

Microfinance at the margin: Experimental evidence from Bosnia and Herzegovina

Author

Listed:
  • Augsburg, Britta
  • de Haas, Ralph
  • Harmgart, Heike
  • Meghir, Costas

Abstract

We use a randomised controlled trial (RCT) to analyse the impact of microcredit on poverty reduction in Bosnia and Herzegovina. The study population are loan appli-cants 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 busi-nesses. 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 labour supply of young adults (16-19 year olds). This was accompanied by a reduction in school attendance.

Suggested Citation

  • 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, WZB Berlin Social Science Center.
    • Handle: RePEc:zbw:wzbeoc:spii2014304
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/93061/1/77936189X.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fafchamps, Marcel & McKenzie, David & McKenzie, David & Quinn, Simon & Woodruff, Christopher, 2011. "When is capital enough to get female enterprises growing ? evidence from a randomized experiment in Ghana," Policy Research Working Paper Series 5706, The World Bank.
    2. Abhijit Banerjee & Sendhil Mullainathan, 2010. "The Shape of Temptation: Implications for the Economic Lives of the Poor," NBER Working Papers 15973, National Bureau of Economic Research, Inc.
    3. Dean Karlan & Jonathan Zinman, 2010. "Expanding Credit Access: Using Randomized Supply Decisions to Estimate the Impacts," The Review of Financial Studies, Society for Financial Studies, vol. 23(1), pages 433-464, January.
    4. Hanan G. Jacoby & Emmanuel Skoufias, 1997. "Risk, Financial Markets, and Human Capital in a Developing Country," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(3), pages 311-335.
    5. Benjamin Feigenberg & Erica M. Field & Rohini Pande, 2010. "Building Social Capital Through MicroFinance," NBER Working Papers 16018, National Bureau of Economic Research, Inc.
    6. 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.
    7. Ghatak, Maitreesh & Guinnane, Timothy W., 1999. "The economics of lending with joint liability: theory and practice," Journal of Development Economics, Elsevier, vol. 60(1), pages 195-228, October.
    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. 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 151-160, February.
    11. Suresh de Mel & David McKenzie & Christopher Woodruff, 2009. "Are Women More Credit Constrained? Experimental Evidence on Gender and Microenterprise Returns," American Economic Journal: Applied Economics, American Economic Association, vol. 1(3), pages 1-32, July.
    12. 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.
    13. 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.
    14. 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.
    15. 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, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jaikishan Desai & Kristin Johnson & Alessandro Tarozzi, 2013. "On the Impact of Microcredit: Evidence from a Randomized Intervention in Rural Ethiopia," Working Papers 741, Barcelona School of Economics.
    2. Manuela Angelucci & Dean Karlan & Jonathan Zinman, 2013. "Win Some Lose Some? Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco," Working Papers 1026, Economic Growth Center, Yale University.
    3. Lori Beaman & Dean Karlan & Bram Thuysbaert, 2014. "Saving for a (not so) Rainy Day: A Ramdomized Evaluation of Savings Groups in Mali," Working Papers 1043, Economic Growth Center, Yale University.
    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. Lori Beaman & Dean Karlan & Bram Thuysbaert & Christopher Udry, 2014. "Self-Selection into Credit Markets: Evidence from Agriculture in Mali," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 14/884, Ghent University, Faculty of Economics and Business Administration.
    6. 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.
    7. Bateman, Milford & Sinković, Dean & Škare, Marinko, 2012. "The contribution of the microfinance model to Bosnia's post-war reconstruction and development: How to destroy an economy and society without really trying," Working Papers 36, Austrian Foundation for Development Research (ÖFSE).
    8. Attanasio, Orazio & Augsburg, Britta & De Haas, Ralph & Fitzsimons, Emla & Harmgart, Heike, 2011. "Group lending or individual lending? Evidence from a randomised field experiment in Mongolia," MPRA Paper 35439, University Library of Munich, Germany.
    9. Lori Beaman & Dean Karlan & Bram Thuysbaert & Christopher Udry, 2023. "Selection Into Credit Markets: Evidence From Agriculture in Mali," Econometrica, Econometric Society, vol. 91(5), pages 1595-1627, September.
    10. Zinman, Jonathan & Karlan, Dean & Osman, Adam, 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.
    11. Morduch, Jonathan & Ravi, Shamika & Bauchet, Jonathan, 2013. "Substitution Bias and External Validity: Why an Innovative Anti-poverty Program Showed no Net Impact," CEI Working Paper Series 2013-02, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    12. Khandker, Shahidur R. & Samad, Hussain A., 2014. "Dynamic effects of microcredit in Bangladesh," Policy Research Working Paper Series 6821, The World Bank.
    13. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Britta Augsburg & Ralph De Haas & Heike Harmgart & Costas Meghir, 2012. "Microfinance at the Microfinance at the margin: experimental evidence from Bosnia and Herzegovina vidence from Bosnia and Herzegovina," Working Papers 146, European Bank for Reconstruction and Development, Office of the Chief Economist.
    2. Britta Augsburg & Ralph De Haas & Heike Harmgart & Costas Meghir, 2012. "Microfinance, Poverty and Education," IFS Working Papers W12/15, Institute for Fiscal Studies.
    3. Britta Augsburg & Ralph De Haas & Heike Harmgart & Costas Meghir, 2015. "The Impacts of Microcredit: Evidence from Bosnia and Herzegovina," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 183-203, January.
    4. Thorsten Beck & Haki Pamuk & Burak R. Uras, 2017. "Entrepreneurial Saving Practices and Reinvestment: Theory and Evidence," Review of Development Economics, Wiley Blackwell, vol. 21(4), pages 1205-1228, November.
    5. 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.
    6. Cho, Yoonyoung & Honorati, Maddalena, 2014. "Entrepreneurship programs in developing countries: A meta regression analysis," Labour Economics, Elsevier, vol. 28(C), pages 110-130.
    7. Asadul Islam & Chongwoo Choe, 2013. "Child Labor And Schooling Responses To Access To Microcredit In Rural Bangladesh," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 46-61, January.
    8. Attanasio, Orazio & Augsburg, Britta & De Haas, Ralph & Fitzsimons, Emla & Harmgart, Heike, 2011. "Group lending or individual lending? Evidence from a randomised field experiment in Mongolia," MPRA Paper 35439, University Library of Munich, Germany.
    9. Augsburg, B. & de Haas, R. & Harmgart, H. & Meghir, C., 2013. "Microfinance and Poverty Alleviation," Discussion Paper 2013-075, Tilburg University, Center for Economic Research.
    10. Asli Demirgüç-Kunt & Ross Levine, 2009. "Finance and Inequality: Theory and Evidence," Annual Review of Financial Economics, Annual Reviews, vol. 1(1), pages 287-318, November.
    11. Jean-Marie Baland & Timothée Demont & Rohini Somanathan, 2020. "Child Labor and Schooling Decisions among Self-Help Group Members in Rural India," Economic Development and Cultural Change, University of Chicago Press, vol. 69(1), pages 73-105.
    12. 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.
    13. Matthias Doepke & Michèle Tertilt, 2019. "Does female empowerment promote economic development?," Journal of Economic Growth, Springer, vol. 24(4), pages 309-343, December.
    14. 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.
    15. Jinnat Ara & Dipanwita Sarkar & Jayanta Sarkar, 2021. "Like mother like daughter? Occupational mobility among children under asset transfer program in Bangladesh," QuBE Working Papers 061, QUT Business School.
    16. Beck, T.H.L. & Pamuk, H. & Uras, R.B., 2014. "Entrepreneurial Saving Practices and Business Investment : Theory and Evidence from Tanzanian MSEs," Other publications TiSEM b2b04b64-d3cf-4c78-9bbe-0, Tilburg University, School of Economics and Management.
    17. Timothée Demont, 2020. "Coping with shocks: the impact of Self-Help Groups on migration and food security," AMSE Working Papers 2016, Aix-Marseille School of Economics, France.
    18. Edmonds, Eric V., 2008. "Child Labor," Handbook of Development Economics, in: T. Paul Schultz & John A. Strauss (ed.), Handbook of Development Economics, edition 1, volume 4, chapter 57, pages 3607-3709, Elsevier.
    19. Karlan, Dean S. & Knight, Ryan & Udry, Christopher R., 2012. "Hoping to Win, Expected to Lose: Theory and Lessons on Micro Enterprise Development," Center Discussion Papers 133405, Yale University, Economic Growth Center.

    More about this item

    Keywords

    microfinance; liquidity constraints; human capital; randomised controlled trial;
    All these keywords.

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:wzbeoc:spii2014304. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/owwzbde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.