Principal Investigators: Santosh Kumar (Sam Houston State University)
Research Team: Misha Sharma, Sayan Kundu, Shreya Chatterjee and Suraj Jacob
LEAD Centre: Financial Inclusion Team, IFMR LEAD
Focus Area: Savings, Credit, Livelihoods
Project Geography: Tamil Nadu, India
Partner: Hand in Hand India
Status: Completed


The self-help group (SHG) program, which began as a women’s empowerment initiative in the 1980’s added a significant financial component in 1992, when a NABARD initiative linked a small number of SHGs with banks. In India today, there are over 69.5 lakh savings-linked SHGs, covering approximately 9.7 crore households. SHGs are more than just a conduit for credit – they also act as a delivery mechanism for various other services, ranging from entrepreneurial training to savings deposits. Despite the scale and potential of SHGs to improve the lives of some of India’s poorest citizens, surprisingly little rigorous evidence has been produced on the impact of SHGs.

For example, while there have been numerous studies on the impact of microfinance programs, many of these studies have focused on the joint-liability group model, the preferred lending methodology of Non-Banking Financial Companies.

The present study investigates the impact of an SHG-based microfinance and entrepreneurship training program. While the objective of the study is to broadly test whether microfinance improves well-being, researchers will also analyze the impact of microfinance and business training on the following outcomes: consumption, savings and borrowing, business creation and profits, access to water and electricity, vulnerability to shocks, education, health and sanitation, domestic violence, and intra-household decision making.

This study is unique in two ways: a) it is the first randomized control trial impact evaluation of the self-help group model and b) it measures the combined impact of microfinance and entrepreneurial training on well-being.

Methodology and Research Design

This study uses a randomized control trial approach to investigate the impact of microfinance and business training on the sample population. A total of 315 Panchayats in 3 districts of southern Tamil Nadu have been selected for the study. After researchers conducted a baseline survey, they randomly assigned panchayats to a treatment or control group (researchers randomized at the panchayat level rather than on the household level). The treatment group is further sub-divided into two groups; some panchayats received financial access and business training (referred to as treatment 1) while others received financial access with much more intensive business training (referred to as treatment 2).

Out of the 315 Panchayats, 32% and 68% of the sample form the control and treatment groups respectively. Groups are then formed and provided with microfinance and business training interventions. An endline survey was conducted to analyze the impact of the intervention on various social and economic outcomes.

Related Resources
HIH Baseline Report
HIH Endline Report
Policy Brief_HIH_Final
SG2018 presentation