Microfinance at the Margin: Experimental Evidence from Bosnia and Herzegovina
Institute for Fiscal Studies (IFS); UNU-MERIT
Ralph De Haas
European Bank for Reconstruction and Development
European Bank for Reconstruction and Development (EBRD)
Yale University; Yale University - Cowles Foundation; Institute for Fiscal Studies (IFS); National Bureau of Economic Research (NBER); University College London; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)
September 12, 2012
We use a randomised controlled trial (RCT) to analyse the impact of microcredit on poverty reduction in Bosnia and Herzegovina. The study population are loan applicants that would normally have just been rejected based on regular screening. We find that 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 their savings, presumably to complement the loan and to achieve the minimum amount necessary to expand their business. In less-educated households, however, consumption went down. A key new result is that there was a substantial increase in the labour supply of young adults (16-19 year olds). This was accompanied by a reduction in school attendance.
Number of Pages in PDF File: 41
Keywords: microfinance, liquidity constraints, human capital, randomized controlled trial
JEL Classification: 016, G21, D21, I32working papers series
Date posted: March 14, 2012 ; Last revised: September 20, 2012
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