DP9506 Win Some Lose Some? Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco

Author(s):	Manuela Angelucci, Dean S. Karlan, Jonathan Zinman
Publication Date:	June 2013
Keyword(s):	Compartamos Banco, microcredit, microcredit impact, microentrepreneurship
JEL(s):	D12, D22, G21, O12
Programme Areas:	Labour Economics, Development Economics
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=9506

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.