The impact of microcredit on income: the case of Banco Real in Brazil

Abstract

This study aims to evaluate the impact of productive microcredit provided by a microfinance institution linked to a commercial bank by examining a sample of 20,628 customers. Academic literature points to the existence of shared specific characteristics amongst successful microcredit programs, including: (a) the use of a solidarity group, also called a joint debtor, (b) strong female participation, (c) a focus on poor regions, and (d) the presence of a loan officer. This article finds that the female variable is associated with increased income for the individual participant. Women began the program with an average sales value less than men, yet their sales grew exponentially at about 10% with each extension of credit.

Microcredit and Gender: Are There Differences in the Credit Conditions?

“…This clear preference for microcredit programs by women is addressed by the studies of Gonzalez, Righetti and Di Serio (2014), Silva, Fonseca and Santos (2016) and Mendonça and Soares (2016), focused on the Brazilian context. The study by Gonzalez et al (2014) evaluated the impact of productive microcredit provided by a microfinance institution linked to a commercial bank.…”

“…The study by Gonzalez et al (2014) evaluated the impact of productive microcredit provided by a microfinance institution linked to a commercial bank. In their study, 64% of the total number of clients are women and the reason for this is, according to microcredit agents, that men seek more security in a formal job while women look for jobs that can reconcile with housework.…”