The Impacts of Microcredit: Evidence from Bosnia and Herzegovina

Abstract

We use an RCT to analyze the impacts of microcredit. The study population consists of loan applicants who were marginally rejected by an MFI in Bosnia. A random subset of these were offered a loan. We provide evidence of higher self-employment, increases in inventory, a reduction in the incidence of wage work and an increase in the labor supply of 16–19-year-olds in the household's business. We also present some evidence of increases in profits and a reduction in consumption and savings. There is no evidence that the program increased overall household income. (JEL C93, G21, I38, J23, L25, P34, P36)

Mobile Money, Individuals’ Payments, Remittances, and Investments: Evidence from the Ashanti Region, Ghana

“…An explanation for these findings is that access to mobile money has increased the willingness of individuals to remit cash, as suggested by Batista and Vicente [19], Blumenstock, Eagle, and Fafchamps [18], and Munyegera and Matsumoto [15]. Second, using mobile money for payments means faster transactions, which may include income-generating transactions [8,9,19,20]. Facilitating transactions with convenience implies a higher volume of transactions within a unit of time, and hence, a positive impact on microbusinesses may arise, as suggested by Bauchet, Marshall, Starita, Thomas, and Yalouris [25], and Klapper, El-Zoghbi, and Hess [3].…”

Follow the money not the cash: Comparing methods for identifying consumption and investment responses to a liquidity shock

“…Substantively, there is little evidence of substantial non-business uses of microenterprise loans in this particular setting. This is surprising, given low impact on business growth in general from microcredit (Angelucci, Karlan, and Zinman 2015;Attanasio et al 2015;Augsburg et al 2015;Crépon et al 2015;Karlan and Zinman 2010), findings from a prior study with one of the lenders here that marginal borrowers decrease investment in their microenterprises (Karlan and Zinman 2011), and mounting concerns that people "over-borrow" to finance consumption (Zinman 2014). 28 It may seem peculiar that the proportion of respondents who report spending more than 2,500 on debt pay down in the explicit question asked by the surveyor (column 6) is higher than the proportion that report this when listing out their spending over the past 2 months (column 7).…”

“…4 See e.g. Angelucci, Karlan and Zinman (2015), Attanasio et al (2015), Augsburg et al (2015), , Crepon et al (2015), Karlan and Zinman (2010), Karlan and Zinman (2011), Tarozzi, Desai and Johnson (2015), and an overview in 5 See e.g. Souleles (1999); Souleles (2002); Shapiro and Slemrod (2003); Johnson, Parker, and Souleles (2006); Agarwal, Liu, and Souleles (2007); Shapiro and Slemrod (2009) ;Sahm, Shapiro, and Slemrod (2012); Parker et al (2013) 6 See the studies cited in the above footnote, with the exception of Karlan and Zinman (2010), which examines untargeted consumer loans.…”

Microfinance beyond self-employment: Evidence for firms in Bulgaria

“…Moreover, studies that do assess programs aiming at employment creation are usually limited to the impact of microcredit on self-employment (e.g. Angelucci et al, 2015;Attanasio et al, 2015;Augsburg et al, 2015;Chemin, 2008;Coleman, 1999 andCrépon et al, 2015;Duvendack and Palmer-Jones, 2012;Montgomery, 2005;Pitt and Khandker, 1998;Roodman and Morduch, 2014;Setboonsarng and Parpiev, 2008). While enabling self-employment is an important outcome, we believe that the acclaimed substantial contribution to job creation and economic growth is only achieved if microcredit succeeds in increasing wage-employment.…”

“…With regard to employment, the only existing study by Augsburg et al (2015) investigates self-employment effects in Bosnia and Herzegovina. The lack of evidence for Eastern Europe is moreover in sharp contrast to the fact that in regional terms, the former Soviet Republics of Eastern Europe and Central Asia continue to receive the largest share of worldwide commitments to microfinance (CGAP, 2016).…”