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

Publication Date

02/02/2014

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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.