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Microfinance at the margin: Experimental evidence from Bosnia and Herzegovina

Britta Augsburg, Ralph De Haas, Heike Harmgart and Costas Meghir

Discussion Papers, Research Unit: Economics of Change from WZB Berlin Social Science Center

Abstract: We use a randomised controlled trial (RCT) to analyse the impact of microcredit on poverty reduction in Bosnia and Herzegovina. The study population are loan appli-cants that would normally have just been rejected based on regular screening. We find that access to credit allowed borrowers to start and expand small-scale busi-nesses. Households that already had a business and where the borrower had more education, ran down their savings, presumably to complement the loan and to achieve the minimum amount necessary to expand their business. In less-educated households, however, consumption went down. A key new result is that there was a substantial increase in the labour supply of young adults (16-19 year olds). This was accompanied by a reduction in school attendance.

Keywords: microfinance; liquidity constraints; human capital; randomised controlled trial (search for similar items in EconPapers)
JEL-codes: D21 G21 I32 O16 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-ltv and nep-mfd
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Citations: View citations in EconPapers (16) Track citations by RSS feed

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