DP9811 Microcredit Impacts: Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco

Author(s): Manuela Angelucci, Dean S. Karlan, Jonathan Zinman
Publication Date: February 2014
Keyword(s): Compartamos Banco, microcredit, microcredit impact, microentrepreneruship
JEL(s): D12, D22, G21, O12
Programme Areas: Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=9811

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.