Does microcredit increase aspirational hope? Evidence from a group lending scheme in Sierra Leone

Adriana Garcia, Robert Lensink and Maarten Voors

World Development, 2020, vol. 128, issue C

Abstract: Microcredit has received considerable attention due to its potential to help achieve the Sustainable Development Goals (SDGs), in particular through its effects on poverty alleviation, female empowerment and self-employment. To date, its effectiveness has largely been evaluated in terms of relieving external constraints of the poor, such as a lack of financial capital for business development. The current study examines whether, and to what extent, microcredit can change internal constraints, such as aspirational hope. We use a cross-sectional dataset of 1295 women in Sierra Leone, 854 of whom are active borrowers of a Microfinance Institution, BRAC. To assess the relationship between microcredit, aspirational hope and economic welfare, we rely on BRAC’s eligibility criteria, that only allow access to finance for women living with-in 4 km of a BRAC branch. We find statistically significant and economically meaningful positive associations with both aspirational hope and economic welfare. Overall, this study suggests that microcredit could play an important role in reducing internal psychological constraints, and via this channel contributes to the realization of the SDGs.

Keywords: C83; G21; I31; O12; Z13; Microcredit; Aspirational hope; Well-being; Poverty; Sierra Leone (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0305750X19305108
Full text for ScienceDirect subscribers only

Related works:
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:eee:wdevel:v:128:y:2020:i:c:s0305750x19305108

DOI: 10.1016/j.worlddev.2019.104861

Access Statistics for this article

World Development is currently edited by O. T. Coomes

More articles in World Development from Elsevier
Bibliographic data for series maintained by Catherine Liu ().