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Microfinance, Poverty and Education

Author

Listed:
  • Britta Augsburg

    (Institute for Fiscal Studies and Institute for Fiscal Studies)

  • Ralph De Haas

    (Institute for Fiscal Studies and European Bank for Reconstruction and Development (EBRD))

  • Heike Harmgart

    (Institute for Fiscal Studies)

  • Costas Meghir

    (Institute for Fiscal Studies and Yale University)

Abstract

We use an RCT to analyze the impact of microcredit on poverty reduction, child and teenage labour supply, and education in Bosnia and Herzegovina. The study population consists of loan applicants that regular screening would have marginally rejected. Access to credit allowed borrowers to start and expand small-scale businesses. Households that already had a business and where the borrower had more education, ran down savings, presumably to complement the loan and achieve the minimum investment amount. However, in less-educated households consumption went down. A key new finding is a substantial increase in the labor supply of children aged 16-19 year old together with a reduction in their school attendance, raising important questions about the unintended intergenerational consequences of relaxing liquidity constraints for self-employment and business creation or expansion.

Suggested Citation

  • Britta Augsburg & Ralph De Haas & Heike Harmgart & Costas Meghir, 2012. "Microfinance, Poverty and Education," IFS Working Papers W12/15, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:12/15
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    References listed on IDEAS

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    Cited by:

    1. Dean Karlan & Ryan Knight & Christopher Udry, 2012. "Hoping to Win, Expected to Lose: Theory and Lessons on Micro Enterprise Development," NBER Working Papers 18325, National Bureau of Economic Research, Inc.
    2. Bruno Crépon & Florencia Devoto & Esther Duflo & William Parienté, 2015. "Estimating the Impact of Microcredit on Those Who Take It Up: Evidence from a Randomized Experiment in Morocco," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 123-150, January.
    3. Victor Chernozhukov & Mert Demirer & Esther Duflo & Ivan Fernandez-Val, 2017. "Generic machine learning inference on heterogenous treatment effects in randomized experiments," CeMMAP working papers 61/17, Institute for Fiscal Studies.
    4. Manuela Angelucci & Dean Karlan & Jonathan Zinman, 2013. "Win Some Lose Some? Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco," Working Papers 1026, Economic Growth Center, Yale University.
    5. 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.
    6. Cho, Yoonyoung & Honorati, Maddalena, 2014. "Entrepreneurship programs in developing countries: A meta regression analysis," Labour Economics, Elsevier, vol. 28(C), pages 110-130.
    7. Jacobus Hoop & Patrick Premand & Furio Rosati & Renos Vakis, 2018. "Women’s economic capacity and children’s human capital accumulation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 31(2), pages 453-481, April.
    8. Manuela Angelucci & Dean Karlan & Jonathan Zinman, 2015. "Microcredit Impacts: Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 151-182, January.
    9. Khandker, Shahidur R. & Samad, Hussain A., 2013. "Are microcredit participants in Bangladesh trapped in poverty and debt ?," Policy Research Working Paper Series 6404, The World Bank.
    10. Attanasio, O.P. & Augsburg, B. & de Haas, R. & Fitzsimons, E. & Harmgart, H., 2013. "Group Lending or Individual Lending? Evidence from a Randomized Field Experiment in Rural Mongolia," Discussion Paper 2013-074, Tilburg University, Center for Economic Research.
    11. Abhijit Banerjee & Esther Duflo & Rachel Glennerster & Cynthia Kinnan, 2015. "The Miracle of Microfinance? Evidence from a Randomized Evaluation," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 22-53, January.
    12. Grimm, Michael & Paffhausen, Anna Luisa, 2015. "Do interventions targeted at micro-entrepreneurs and small and medium-sized firms create jobs? A systematic review of the evidence for low and middle income countries," Labour Economics, Elsevier, vol. 32(C), pages 67-85.
    13. Attanasio, Orazio & Augsburg, Britta & De Haas, Ralph & Fitzsimons, Emla & Harmgart, Heike, 2011. "Group lending or individual lending? Evidence from a randomised field experiment in Mongolia," MPRA Paper 35439, University Library of Munich, Germany.
    14. Zinman, Jonathan & Karlan, Dean & Osman, Adam, 2013. "Follow the Money: Methods for Identifying Consumption and Investment Responses to a Liquidity Shock," CEPR Discussion Papers 9773, C.E.P.R. Discussion Papers.
    15. Fumagalli, Laura & Martin, Thomas, 2023. "Child labor among farm households in Mozambique and the role of reciprocal adult labor," World Development, Elsevier, vol. 161(C).
    16. Salia, Samuel & Hussain, Javed & Tingbani, Ishmael & Kolade, Oluwaseun, 2017. "Is women empowerment a zero Sum game? Unintended Consequences of microfinance for Women’s empowerment in Ghana," MPRA Paper 82895, University Library of Munich, Germany, revised 23 Aug 2017.

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    More about this item

    Keywords

    Microfinance; liquidity constraints; human capital; randomized controlled trial;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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