Working Paper: CEPR ID: DP9811
Authors: Manuela Angelucci; Dean S. Karlan; Jonathan Zinman
Abstract: Theory and evidence have raised concerns that microcredit does more harm than good, particularly when offered at high interest rates. We use a clustered randomized trial, and household surveys of eligible borrowers and their businesses, to estimate impacts from an expansion of group lending at 110% APR by the largest microlender in Mexico. Average effects on a rich set of outcomes measured 18-34 months postexpansion suggest no transformative impacts, but more positive than negative impacts.
Keywords: Compartamos Banco; Microcredit; Microcredit Impact; Microentrepreneurship
JEL Codes: D12; D22; G21; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Expanded access to microcredit (O16) | Loan uptake (G51) |
| Expanded access to microcredit (O16) | Total net borrowing (H69) |
| Expanded access to microcredit (O16) | Outstanding debt (H63) |
| Expanded access to microcredit (O16) | Likelihood of informal borrowing (G51) |
| Expanded access to microcredit (O16) | Household businesses growth (D19) |
| Expanded access to microcredit (O16) | Government aid (F35) |
| Expanded access to microcredit (O16) | Female intrahousehold decision power (D13) |