Microcredit and Poverty Impact Analysis

The percentage of borrowers who are female in a microcredit program.

The likelihood of a borrower repaying their loan on time. This is often measured as the proportion of borrowers who are late on their payments.

The annual percentage rate (APR) charged on a microcredit loan.

The amount of money borrowed by a microfinance borrower.

The frequency with which borrowers make payments on their loans. This could be weekly, biweekly, monthly, etc.

The length of time borrowers have to repay their loans. This can be measured in months or years.

The level of risk associated with lending money to a particular borrower.

A loan program designed to provide small loans to low-income individuals and entrepreneurs.

A study conducted at the end of the microcredit program to assess its impact

The method used to assign borrowers to different groups (e.g., treatment group vs. control group) in a microcredit program.

The criteria used to decide who is eligible to receive a microcredit loan.

The model used to determine the interest rate charged to borrowers in a microcredit program. Some factors include borrower risk, loan amount, or repayment frequency.

A group of borrowers who are collectively responsible for each other's loans.

A microcredit loan program where borrowers are expected to repay their loans even if other borrowers in their group default.

A microcredit loan program where borrowers are only responsible for their own loans.

Microcredit access generally helped businesses grow but rarely led to higher profits.

In Mexico, microcredit programs led to an expansion of existing businesses.

Microloans in Morocco increased sales for farmers and livestock owners by about 20%.

While microcredit increased sales of businesses in Morocco, the gains were balanced out by cuts in wages and reduced household asset sales, resulting in no overall income change.

Businesses in Ethiopia, India, and Mexico, that received microcredit saw an overall increase in business investments and expenses.

Microcredit programs didn't consistently lead to higher profits for borrowers in Bosnia and Herzegovina, Ethiopia, India, and Mexico.

Consumption is often used as a surrogate for income to evaluate the effects of microcredit.

Microcredit access had a mixed impact on income levels. Some studies showed increases, while others indicated no significant change.

The ability to choose one's work, make household spending decisions, finance large purchases (like homes or businesses), avoid selling assets in emergencies, and manage risks.

Using a random selection process to assign participants into different groups for study, often used to assess the effectiveness of interventions like microcredit programs.

A study where participants are randomly assigned to receive a treatment (e.g., microcredit) or not, allowing researchers to compare outcomes and identify the impact of the treatment.

A technique used to assess the effectiveness of microcredit by comparing outcomes of borrowers who received loans with those who did not.

A study conducted before a program starts to gather data about participants, their needs, and their situation.

A method of providing microcredit where borrowers are grouped together and share responsibility for each other's loans.

A study that follows participants over time to observe changes and impacts across different phases of a program.

Microcredit programs, like those offered by Compartamos, can stimulate market growth by lowering interest rates, attracting new borrowers, and generating profit.

In Mali, offering agricultural loans led to a positive self-selection process, attracting farmers who were most likely to succeed and benefit from the extra capital.

The effectiveness of microcredit programs can be influenced by various factors beyond just product design. These factors include consumer protection, credit bureaus, and regulatory oversight, all of which require careful examination and analysis.

The rapid growth of microcredit programs can be directly linked to policy decisions, both enabling and restricting the development of these financial services.

Studies have shown that different repayment frequencies, like weekly or monthly payments, can significantly affect default rates, influencing the overall effectiveness of microfinance programs.

Improved personal identification, which can be facilitated by a credit bureau, plays a significant role in enhancing the performance of credit markets by reducing information asymmetry.

Groups that provide loans to individuals, known as joint liability lending groups, have been investigated to determine their impact on microfinance programs, focusing on both short-term and long-term outcomes.

In Bosnia and Herzegovina, excluding the top 1% of business profits, there was a significant increase in profits for the remaining businesses after they received microcredit.

Research in India found a more than doubling of average profits for businesses that existed before gaining access to microcredit. However, this increase was driven primarily by businesses that were already highly profitable before receiving credit.

In Ethiopia, microcredit programs were found to potentially increase food insecurity. Households in microcredit communities reported an extra half-month of food insecurity compared to households in similar communities without microcredit access.

Microcredit did not consistently impact household consumption across all studied locations. For example, in India total consumption was similar in treatment communities and control communities. However, in Mongolia, food and total consumption increased for households in villages with group-liability microcredit schemes.

In the Philippines, microcredit programs may have led to a reduction in business size. Businesses that received offers for microcredit had 0.3 fewer employees on average compared to other businesses.

In Morocco, microcredit programs had no observed impact on overall household consumption.

Microcredit can have varied impacts on business growth, and may even lead to negative consequences like increased food insecurity in some cases.

Microcredit programs are designed to provide small loans to individuals and businesses, often without the need for collateral. However, the actual impact of these programs can vary greatly depending on the specific context and implementation.