Demasking the impact of microfinance

Helke Waelde

No 1115, Working Papers from Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz

Abstract: We reconsider data from a randomized control trial study in India. The data reveal the impact of a microloan program. We extend the often used randomized impact evaluation and di¤erence-in-di¤erence approach by quantile regression and the consideration of the quantile treatment effects. The use of additional, more advanced, evaluation methods allows a more detailed consideration of borrowers at the lower and at the upper end of the wealth distribution. We find a strong negative and signi.cant time-trend. Furthermore, we observe a negative impact of the provi- sion of microfinance loans such that the overall impact is even more negative. This is particularly well seen for entrepreneurs in the lower and in the higher quantiles. As we learn that poor entrepreneurs use microloans for consumption, we doubt that micro.nance is the right instrument for them. The data suggest that providing microloans for average entrepreneurs, who can hire very poor entrepreneurs, might be an effective solution for that dilemma.

JEL-codes: D44 E43 E52 E58 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2011-11-09, Revised 2011-11-09
New Economics Papers: this item is included in nep-dev, nep-ent and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:jgu:wpaper:1115

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