Microcredit: equilibrium effects

Aanchal Bagga and Cynthia Kinnan

Oxford Review of Economic Policy, 2024, vol. 40, issue 1, 54-70

Abstract: Changes to access to credit can potentially cause changes to the returns to various factors—general equilibrium (GE) effects. This paper considers changes in wages, prices of goods and services, interest rates, and in the returns to forming or maintaining social ties. Such GE effects can lead to positive and/or negative indirect effects on economic agents, including those who are not directly affected by a given credit policy. Thus such effects matter for the average level and distribution of impacts resulting from credit access. In addition, GE effects have implications for research design, in that those who are indirectly affected via GE channels are generally not a valid counterfactual for those who are directly affected.

Keywords: microcredit; general equilibrium; programme evaluation (search for similar items in EconPapers)
Date: 2024
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