Working Paper: NBER ID: w19119
Authors: Manuela Angelucci; Dean 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 post-expansion suggest some good and little harm. Other estimators identify heterogeneous treatment effects and effects on outcome distributions, but again yield little support for the hypothesis that microcredit causes harm.
Keywords: microcredit; randomized trial; group lending; borrower outcomes
JEL Codes: D12; D22; G21; O17
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Microcredit access (O16) | Business investment (G31) |
| Microcredit access (O16) | Consumption smoothing (D15) |
| Microcredit access (O16) | Happiness (I31) |
| Microcredit access (O16) | Trust in others (Z13) |
| Microcredit access (O16) | Female decision-making power (J16) |
| Microcredit access (O16) | Negative treatment effects for specific subgroups (D91) |
| Microcredit access (O16) | Worsening outcomes over time (I12) |