Does microfinance have an impact? Three quantitative approaches in rural areas of Bangladesh and Andhra Pradesh, India

Microfinance has attracted, since its inception at the end of the seventies, the attention of many people and institutions, both at academic and donor levels. However, evidence is mixed so far and no definitive conclusion has yet emerged with respect to the positive effects of microfinance, in part because of the great differences among the different microfinance schemes but also because of methodological issues. This work aims to add some further evidence to the impact debate, with three studies in two different rural areas from Bangladesh and India. The first study is based on the second round of a survey in Bangladesh undertaken by the World Bank. A Propensity Score Matching approach was chosen to study the impact of borrowing on household income and expenditures per capita. In this case positive impact can only be seen in extraordinary expenditures, in particular in house extensions and investments in houses and land, but not in current expenditures or food expenditures. The second and third studies analyse a dataset collected in five districts of Andhra Pradesh, India. The former tries to answer the question of whether borrowing from Self-Help groups (SHGs) has any effect on income and income per capita at household level. Pooled ordinary least squares and difference in differences approaches are used to that end. A significant impact is found in this study on income and income per capita. In the last empirical work the main interest is focused on the distributional impact, on the understanding that anti-poverty measures should be focused on households at the bottom tail of income and income per capita distributions. Its analysis is based on quantile regression, with cross sectional and panel data approaches. Distributional impact shows, however, that the poorest might not be benefitting from these interventions as much as better-off or not-so-poor households