The miracle of microfinance? Evidence from a randomized evaluation

Abhijit Banerjee, Esther Duflo, Rachel Glennerster, Cynthia Kinnan

Research output: Contribution to journalArticle

297 Scopus citations

Abstract

This paper reports results from the randomized evaluation of a group-lending microcredit program in Hyderabad, India. A lender worked in 52 randomly selected neighborhoods, leading to an 8.4 percentage point increase in takeup of microcredit. Small business investment and profits of preexisting businesses increased, but consumption did not significantly increase. Durable goods expenditure increased, while "temptation goods" expenditure declined. We found no significant changes in health, education, or women's empowerment. Two years later, after control areas had gained access to microcredit but households in treatment area had borrowed for longer and in larger amounts, very few significant differences persist.

Original languageEnglish (US)
Pages (from-to)22-53
Number of pages32
JournalAmerican Economic Journal: Applied Economics
Volume7
Issue number1
DOIs
StatePublished - Jan 1 2015

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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