Study of microcredit finds generally positive, but not transformative, impacts
Microcredit generally benefits borrowers, according to new research focused on Mexico’s biggest for-profit microlender — but it’s not lifting people out of poverty.
In a multi-year, randomized evaluation of microloans provided by Compartamos Banco, Yale University economist Dean Karlan, with collaborators Manuela Angelucci of the University of Michigan and Jonathan Zinman of Dartmouth College, show there are generally positive effects on average and find little evidence that some borrowers end up worse off while others end up better off. However, the canonical story that microcredit leads to higher enterprise income did not bear fruit. (more…)