The Miracle of Microfinance Revisited: Evidence from Propensity Score Matching

Inna Cintina () and Inessa Love

No 201424, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: We provide new evidence on the effectiveness of microfinance intervention for poverty alleviation. We apply the Propensity Score Matching (PSM) method to data collected in a recent randomized control trial (RCT) in India by Banerjee et al. (2014). The PSM method allows us to answer an additional set of questions not answered by the original study. First, we explore the characteristics of MFI borrowers relative to two comparison groups: those without any loans and those with other types of loans, predominantly from family and friends and money lenders. Second, we compare the impact on expenditures of MFI borrowers relative to these two comparison groups. We find that microfinance borrowers have higher expenditures in a number of categories, notably durables, house repairs, health, festivals and temptation goods. The differences are stronger relative to those without any loans. Our results suggest that microfinance can make a larger difference for households previously excluded from other credit sources. However, some of the increased expenditures are unlikely to lead to long-term benefits and there is no significant difference in total expenditures. We also present suggestive evidence of negative spillovers, i.e. non-participants reducing some categories of expenditures, while MFI participants "pick up the tab."

Pages: 33 pages
Date: 2014-09
New Economics Papers: this item is included in nep-dev, nep-exp and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.economics.hawaii.edu/research/workingpapers/WP_14-24.pdf First version, 2014 (application/pdf)

Related works:
Working Paper: The Miracle of Microfinance Revisited: Evidence from Propensity Score Matching (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hai:wpaper:201424

Ordering information: This working paper can be ordered from
http://www.economics ... esearch/working.html

Access Statistics for this paper

More papers in Working Papers from University of Hawaii at Manoa, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Web Technician ().