Microfinance and Entrepreneurship at the Base of the Pyramid

42 Pages Posted: 12 Jun 2015 Last revised: 22 Aug 2019

See all articles by Jasjit Singh

Jasjit Singh

INSEAD; INSEAD

Pushan Dutt

INSEAD - Economics and Political Sciences

Date Written: August 22, 2019

Abstract

There continues to be substantial debate on whether and how providing inclusive access to finance through microcredit promotes development at the base of the pyramid. We contribute to this literature by examining household-level outcomes associated with different kinds of microfinance loans, and identifying conditions under which these loans achieve the most impact. Defying common expectations, loans funding microenterprises do not exhibit greater impact than those funding traditional livelihood activities, and loans for starting new microenterprises fare particularly poorly. But loan impact improves when multiple members of a microfinance borrower group seek livelihood loans together, and when the provided loans match the exact financial needs of the borrowers. Our findings underscore the need to refine how microfinance is applied as a tool for supporting entrepreneurship-led development.

Keywords: Microenterprise, Access to Finance, Microcredit, Base of the Pyramid (BOP), Emerging Economies, Economic Development

Suggested Citation

Singh, Jasjit and Dutt, Pushan, Microfinance and Entrepreneurship at the Base of the Pyramid (August 22, 2019). INSEAD Working Paper No. 2019/38/STR/EPS. Available at SSRN: https://ssrn.com/abstract=2616746 or http://dx.doi.org/10.2139/ssrn.2616746

Jasjit Singh (Contact Author)

INSEAD ( email )

1 Ayer Rajah Avenue
Singapore, 138676
Singapore
+65 67995341 (Phone)

HOME PAGE: http://faculty.insead.edu/singhj/

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

Pushan Dutt

INSEAD - Economics and Political Sciences ( email )

1 Ayer Rajah Avenue
Singapore, 138676
Singapore
65-6799-5498 (Phone)

HOME PAGE: http://faculty.insead.edu/pushan-dutt/

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