Working Paper: NBER ID: w20144
Authors: Bruno Crepon; Florencia Devoto; Esther Duflo; William Pariente
Abstract: This paper reports the results from a randomized evaluation of a microcredit program introduced in rural areas of Morocco starting in 2006 by Al Amana, the country's largest microfinance institution. Al Amana was the only MFI operating in the study areas during the evaluation period. Thirteen percent of the households in treatment villages took a loan, and none in control villages. Among households identified as more likely to borrow based on ex-ante characteristics, microcredit access led to a significant rise in investment in assets used for self-employment activities (mainly animal husbandry and agriculture), and an increase in profit. But this increase in profit was offset by a reduction in income from casual labor, so overall there was no gain in measured income or consumption. We find suggestive evidence that these results are mainly driven by effects on borrowers, rather than by externalities on households that do not borrow. This implies that among those who chose to borrow, microcredit had large, albeit very heterogeneous, impacts on assets and profits from self-employment activities, but small impact on consumption: we can reject an increase in consumption of more than 10% among borrowers, two years after initial rollout.
Keywords: Microcredit; Randomized Experiment; Morocco; Self-employment; Income
JEL Codes: D21; G21; O16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| microcredit access (O16) | investment in self-employment activities (L26) |
| microcredit access (O16) | profits from self-employment activities (D33) |
| microcredit access (O16) | asset holdings (G32) |
| microcredit access (O16) | business expenditures (E20) |
| increase in self-employment income (J23) | total income levels (D31) |
| microcredit access (O16) | consumption patterns (D10) |
| microcredit access (O16) | spillover effects on non-borrowers (F65) |