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Microfinance on the margin: why recent impact studies may understate average treatment effects

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  • Bruce Wydick

Abstract

A series of recent randomised trials estimate the impact of microfinance on incomes, consumption, and other key measures of welfare. This comment demonstrates why impact estimates obtained from experimental designs focusing on marginal microfinance borrowers are likely to understate the impacts yet realised by inframarginal borrowers, those having taken microfinance loans prior to implementation of an experiment, when field experiments are implemented in areas broadly served by microfinance.

Suggested Citation

  • Bruce Wydick, 2016. "Microfinance on the margin: why recent impact studies may understate average treatment effects," Journal of Development Effectiveness, Taylor & Francis Journals, vol. 8(2), pages 257-265, June.
    • Handle: RePEc:taf:jdevef:v:8:y:2016:i:2:p:257-265
    DOI: 10.1080/19439342.2015.1121512
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    Cited by:

    1. Erhardt, Eva, 2017. "Microfinance beyond self-employment: Evidence for firms in Bulgaria," MPRA Paper 79294, University Library of Munich, Germany.
    2. Schoofs, Annekathrin, 2022. "Promoting financial inclusion for savings groups: A financial education programme in rural Rwanda," Journal of Behavioral and Experimental Finance, Elsevier, vol. 34(C).
    3. R. Khandker, Shahidur & Khalily, M. A. Baqui & A. Samad, Hussain, 2015. "Who Benefits Most from Microfinance in Bangladesh?," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 38(4), pages 1-30, December.
    4. Morduch, Jonathan, 2020. "Why RCTs failed to answer the biggest questions about microcredit impact," World Development, Elsevier, vol. 127(C).
    5. Félix, Elisabete Gomes Santana & Belo, Teresa Freitas, 2019. "The impact of microcredit on poverty reduction in eleven developing countries in south-east Asia," Journal of Multinational Financial Management, Elsevier, vol. 52.
    6. Dahal, Mahesh & Fiala, Nathan, 2020. "What do we know about the impact of microfinance? The problems of statistical power and precision," World Development, Elsevier, vol. 128(C).
    7. Erhardt, Eva Christine, 2017. "Microfinance beyond self-employment: Evidence for firms in Bulgaria," Labour Economics, Elsevier, vol. 47(C), pages 75-95.
    8. Abhijit Banerjee & Esther Duflo & Richard Hornbeck, 2018. "How Much do Existing Borrowers Value Microfinance? Evidence from an Experiment on Bundling Microcredit and Insurance," Economica, London School of Economics and Political Science, vol. 85(340), pages 671-700, October.
    9. Choda, Amreen & Schoofs, Annekathrin & Verrinder, Noel, 2020. "Improving housing conditions: Labelled loans in Kenya and Uganda," Ruhr Economic Papers 878, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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