Re-Evaluating Microfinance: Evidence from Propensity Score Matching

30 Pages Posted: 19 Apr 2017

See all articles by Inna Cintina

Inna Cintina

University of Hawaii at Manoa

Inessa Love

University of Hawaii

Date Written: April 17, 2017

Abstract

This paper evaluates effectiveness of microfinance using Propensity Score Matching (PSM) method applied to data collected in a recent randomized control trial. This method allows one to answer an additional set of questions not answered by the original study and provide more nuanced evidence by comparing Microfinance Institution (MFI) borrowers to those without any loans and those with prior loans from other sources. It is argued that this unique setting with two comparison groups allows us to shed light on the unobservable entrepreneurial spirit bias and provides upper and lower bounds on the true microfinance impact. The results suggest that microfinance can make a modest difference for some households in several expenditure categories.

Keywords: Inequality, Microfinance, Rural Microfinance and SMEs

Suggested Citation

Cintina, Inna and Love, Inessa, Re-Evaluating Microfinance: Evidence from Propensity Score Matching (April 17, 2017). World Bank Policy Research Working Paper No. 8028. Available at SSRN: https://ssrn.com/abstract=2954262

Inna Cintina (Contact Author)

University of Hawaii at Manoa ( email )

University of Hawaii
2424 Maile Way, Saunders 540
Honolulu, HI 96822
United States

HOME PAGE: http://www.uhero.hawaii.edu/17/people

Inessa Love

University of Hawaii ( email )

Honolulu, HI
United States

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