Microfinance and Entrepreneurship at the Base of the Pyramid

52 Pages Posted: 12 Jun 2015 Last revised: 1 Mar 2021

See all articles by Jasjit Singh

Jasjit Singh

INSEAD; INSEAD

Pushan Dutt

INSEAD - Economics and Political Sciences

Arzi Adbi

National University of Singapore

Date Written: January 27, 2021

Abstract

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

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

Suggested Citation

Singh, Jasjit and Dutt, Pushan and Adbi, Arzi, Microfinance and Entrepreneurship at the Base of the Pyramid (January 27, 2021). INSEAD Working Paper No. 2021/03/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/

Arzi Adbi

National University of Singapore ( email )

15 Kent Ridge Drive
Mochtar Riady Building
Singapore, Singapore 119245
Singapore

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