THE MIRACLE OF MICROFINANCE? EVIDENCE FROM A RANDOMIZED EVALUATION

THE MIRACLE OF MICROFINANCE? EVIDENCE FROM A RANDOMIZED EVALUATION
April 2013 -Abhijit Banerjee, Esther Duflo, Rachel Glennerster & Cynthia Kinnan
Lead Center : Centre for Microfinance
Focus Area :Credit

This paper reports on the first randomized evaluation of the impact of introducing the standard microcredit group-based lending product in a new market. In 2005, half of 104 slums in Hyderabad, India were randomly selected for opening of a branch of a particular microfinance institution (Spandana) while the remainder were not, although other MFIs were free to enter those slums. Fifteen to 18 months after Spandana began lending in treated areas, households were 8.8 percentage points more likely to have a microcredit loan. The results of this study are largely consistent with those of four other evaluations of similar programs in different contexts. This paper updates and supersedes the 2010 version, which reported results using one wave of endline surveys.


Related Projects : The Impact of Access to Finance in Rural Tamil Nadu: Evidence from a Randomized Control Trial

This paper reports on the first randomized evaluation of the impact of introducing the standard microcredit group-based lending product in a new market. In 2005, half of 104 slums in Hyderabad, India were randomly selected for opening of a branch of a particular microfinance institution (Spandana) while the remainder were not, although other MFIs were free to enter those slums. Fifteen to 18 months after Spandana began lending in treated areas, households were 8.8 percentage points more likely to have a microcredit loan. The results of this study are largely consistent with those of four other evaluations of similar programs in different contexts. This paper updates and supersedes the 2010 version, which reported results using one wave of endline surveys.