WHO BENEFITS FROM MICROFINANCE? THE IMPACT EVALUATION OF LARGE SCALE PROGRAMS IN BANGLADESH

Asad Islam

No 29/08, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: This paper evaluates the impact of microfinance on household consumption using a new, large and unique cross-section data set from Bangladesh. The richness of the data and program eligibility criterion allow the use of a number of non-experimental impact evaluation techniques, in particular instrumental variable (IV) estimation and propensity score matching (PSM). Estimates from both IV and PSM strategies have been interpreted as average causal effects that are valid for various groups of participants in microfinance. The overall results indicate that the effects of micro loans are not robust across all groups of poor household borrowers. It appears that the poorest of the poor participants are among those who benefit most. The impact estimates are lower, or sometimes even negative, for those households marginal to the participation decision. The effects of participation are, in general, stronger for male borrowers. These results hold across different specifications and methods, including correction for various sources of selection bias (including possible spill-over effects).

Keywords: Microfinance; treatment effect; Matching; Consumption. (search for similar items in EconPapers)
JEL-codes: C31 H43 I30 L30 O12 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2008-10-02
New Economics Papers: this item is included in nep-dev and nep-mfd
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Citations: View citations in EconPapers (4)

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