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Assessing the Effect of Microfinance on Vulnerability and Poverty among Low Income Households

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  • Ranjula Bali Swain
  • Maria Floro

Abstract

We empirically investigate whether participation in the Indian Self Help Group (SHG) microfinance programme has helped reduced poverty and household vulnerability using cross-sectional SHG rural household survey data. The potential selection bias is eliminated by propensity score matching to estimate the average treatment on treated effect using nearest neighbour matching and a local linear regression algorithm. We find that vulnerability in SHG members is not significantly higher than in non-SHG members, even though the SHG members have a high incidence of poverty. However, vulnerability declines significantly for those that have been SHG members for more than one year. These results are found to be robust using sensitivity analysis and the Rosenbaum bounds method.

Suggested Citation

  • Ranjula Bali Swain & Maria Floro, 2011. "Assessing the Effect of Microfinance on Vulnerability and Poverty among Low Income Households," Journal of Development Studies, Taylor & Francis Journals, vol. 48(5), pages 605-618, June.
    • Handle: RePEc:taf:jdevst:v:48:y:2012:i:5:p:605-618
    DOI: 10.1080/00220388.2011.615917
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    1. Stefan Dercon (QEH), "undated". "Vulnerability: a micro perspective," QEH Working Papers qehwps149, Queen Elizabeth House, University of Oxford.
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    Cited by:

    1. Muhammad Masood Azeem & Amin W. Mugera & Steven Schilizzi & Kadambot H. M. Siddique, 2017. "An Assessment of Vulnerability to Poverty in Punjab, Pakistan: Subjective Choices of Poverty Indicators," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 134(1), pages 117-152, October.
    2. Ukpe, Offiong Uma & Nweze, Noble Jackson & Arene, Chukwuemeka John, 2016. "Food Insecurity Vulnerability Status Of Farm Households In Niger- Delta, Nigeria," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 4(1), pages 1-15, January.
    3. Inna Cintina & Inessa Love, 2014. "The Miracle of Microfinance Revisited: Evidence from Propensity Score Matching," Working Papers 201424, University of Hawaii at Manoa, Department of Economics.
    4. Halimah Abdul Manaf, 2017. "Impact of Microcredit Scheme on the Development of Entrepreneurship Skills among Low Income Households in a Developing Country Context," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 583-593.
    5. Mathilde Maîtrot & Miguel Niño-Zarazúa, 2017. "Poverty and wellbeing impacts of microfinance: What do we know?," WIDER Working Paper Series 190, World Institute for Development Economic Research (UNU-WIDER).
    6. Xiaohua Wang & Meilan Chen & Xi He & Fangfang Zhang, 2018. "Credit Constraint, Credit Adjustment, and Sustainable Growth of Farmers’ Income," Sustainability, MDPI, vol. 10(12), pages 1-15, November.
    7. Dan Brockington & Nicola Banks, 2014. "Exploring the Success of BRAC Tanzania’s Microcredit Programme," Global Development Institute Working Paper Series 20214, GDI, The University of Manchester.

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