The Impact of Microcredit on the Poor in Bangladesh: Revisiting the Evidence

42 Pages Posted: 6 Sep 2013

See all articles by David Roodman

David Roodman

Open Philanthropy

Jonathan Morduch

New York University (NYU) - Robert F. Wagner Graduate School of Public Service; New York University (NYU) - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: June 2013

Abstract

We replicate and reanalyse the most influential study of microcredit impacts (Pitt and Khandker, 1998). That study was celebrated for showing that microcredit reduces poverty, a much hoped-for possibility (though one not confirmed by recent randomized controlled trials). We show that the original results on poverty reduction disappear after dropping outliers, or when using a robust linear estimator. Using a new program for estimation of mixed process maximum likelihood models, we show how assumptions critical for the original analysis, such as error normality, are contradicted by the data. We conclude that questions about impact cannot be answered in these data.

JEL Classification: C21, C23, C24, C25, O12, O16

Suggested Citation

Roodman, David and Morduch, Jonathan, The Impact of Microcredit on the Poor in Bangladesh: Revisiting the Evidence (June 2013). NYU Wagner Research Paper No. 2231535, Available at SSRN: https://ssrn.com/abstract=2231535 or http://dx.doi.org/10.2139/ssrn.2231535

David Roodman (Contact Author)

Open Philanthropy ( email )

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Jonathan Morduch

New York University (NYU) - Robert F. Wagner Graduate School of Public Service ( email )

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New York University (NYU) - Department of Economics ( email )

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HOME PAGE: http://www.nyu.edu/projects/morduch

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