Expanding Microenterprise Credit Access: Using Randomized Supply Decisions to Estimate the Impacts in Manila

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Microcredit seeks to promote business growth and improve well-being by expanding access to credit. We use a field experiment and follow-up survey to measure impacts of a credit expansion for microentrepreneurs in Manila. The effects are diffuse, heterogeneous, and surprising. Although there is some evidence that profits increase, the mechanism seems to be that businesses shrink by shedding unproductive workers. Overall, borrowing households substitute away from labor (in both family and outside businesses), and into education. We also find substitution away from formal insurance, along with increases in access to informal risksharing mechanisms. Our treatment effects are stronger for groups that are not typically targeted by microlenders: male and higher-income entrepreneurs. In all, our results suggest that microcredit works broadly through risk management and investment at the household level,rather than directly through the targeted businesses.

Document Information

Document Type Paper
Autor Karlan, D.; Zinman, J.
Year of Publication 2009
Editor The Financial Access Initiative and Innovations for Poverty Action
Número de Páginas 33 pp.
Región / País Global /
Idioma Principal Inglés (en)
Palabras clave Microcredit, Gestión De Riesgos
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