Microfinance and Poverty Alleviation

B. Augsburg, R. de Haas, H. Harmgart, C. Meghir

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Abstract

Abstract: We use an RCT to analyze the impact of microcredit on poverty reduction. The study population consists of loan applicants to a large microfinance institution in Bosnia and Herzegovina who would have been rejected through regular screening. Access to credit allowed borrowers to start and expand small-scale businesses. THe re is little evidence that this lead to net increases in household income. 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. In less-educated households, where assets were low consumption went down instead. For these households the labor supply of teenage children aged 16-19 increased, and their school attendance declined.
Original languageEnglish
Place of PublicationTilburg
PublisherFinance
Number of pages43
Volume2013-075
Publication statusPublished - 2013
Externally publishedYes

Publication series

NameCentER Discussion Paper
Volume2013-075

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Keywords

  • Microfinance
  • liquidity constraints
  • human capital
  • randomized controlled trial

Cite this

Augsburg, B., de Haas, R., Harmgart, H., & Meghir, C. (2013). Microfinance and Poverty Alleviation. (CentER Discussion Paper; Vol. 2013-075). Tilburg: Finance.