Measuring Microfinance: Assessing the Conflict between Practitioners and Researchers with Evidence from Nepal

Ram Rajbanshi, Meng Huang and Bruce Wydick

World Development, 2015, vol. 68, issue C, 30-47

Abstract: What accounts for the discrepancy between microfinance impact claims of development practitioners and the far smaller impacts found in experimental studies? We demonstrate in a simple theoretical framework why “before-and-after” observations of practitioners overstate microfinance impacts and why estimations in some recent randomized trials understate the average treatment effect on the treated (ATT). Our empirical study uses a unique data set from eastern Nepal to study the impact of microfinance in villages where microfinance did not previously exist. We find that approximately three-fourths of the apparent impact of microfinance observed by practitioners is an illusion driven by correlated unobservable factors.

Keywords: microfinance; Nepal; event studies; average treatment effects (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:68:y:2015:i:c:p:30-47

DOI: 10.1016/j.worlddev.2014.11.011

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