Microfinance and Entrepreneurship at the Base of the Pyramid
41 Pages Posted: 12 Jun 2015 Last revised: 1 Aug 2018
Date Written: August 1, 2018
Using a proprietary dataset on microfinance, we examine household-level outcomes associated with using microcredit to support entrepreneurship at the base of the pyramid (BOP). While small loans meant for funding income-generating activities are associated with positive economic outcomes, those specifically for funding microenterprise do not necessarily produce better outcomes than those for funding traditional means of livelihood. Further, loans for starting new microenterprises fare worse than those for growing existing microenterprises. This suggests that lack of complementary resources and skills might work against BOP microenterprises, highlighting a need to refine models targeting promoting microenterprise merely through indiscriminate access to credit.
Keywords: Microenterprise, Access to Finance, Microcredit, Base of the Pyramid (BOP), Emerging Economies, Economic Development
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