Estimating the Impact of Microcredit on Those Who Take It Up: Evidence from a Randomized Experiment in Morocco

By Bruno Crépon, F. Devoto, Esther Duflo, William Parienté. 2014

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This paper reports the results from a randomized evaluation of a microcredit program introduced in rural areas of Morocco starting in 2006 by Al Amana, the country’s largest microfinance institution. Al Amana was the only MFI operating in the study areas during the evaluation period. Thirteen percent of the households in treatment villages took a loan, and none in control villages. Among households identified as more likely to borrow based on ex-ante characteristics, microcredit access led to a significant rise in investment in assets used for self-employment activities (mainly animal husbandry and agriculture), and an increase in profit. But this increase in profit was offset by a reduction in income from casual labor, so overall there was no gain in measured income or consumption. We find suggestive evidence that these results are mainly driven by effects on borrowers, rather than by externalities on households that do not borrow. This implies that among those who chose to borrow, microcredit had large, albeit very heterogeneous, impacts on assets and profits from self-employment activities, but small impact on consumption: we can reject an increase in consumption of more than 10% among borrowers, two years after initial rollout.

Subfields: Economics and Econometrics, Safety Research, Soil Science

View Paper: https://www.semanticscholar.org/paper/87b849a659aed7c58cac356cccf39003ed3ec1a7

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Citations in the corpus

Changes in Social Network Structure in Response to Exposure to Formal Credit Markets (2021, unknown): “…consumption, investment or business proﬁt (Angelucci et al ., 2015; Attanasio et al ., 2015; Augsburg et al ., 2015; Banerjee et al ., 2015b, 2015a; Cr´epon et al ., 2015; Tarozzi et al ., 2015) (see Meager, 2015 for a meta-analysis), but also with our ﬁndings in Section 5.2, below, that L…”
Can Microfinance Unlock a Poverty Trap for Some Entrepreneurs? (2019, background): “These results are broadly consistent with those of five other RCTs (Attanasio et al. (2015); Augsburg et al. (2015); Crépon et al. (2015); Karlan and Zinman (2009); Tarozzi et al. (2015); Angelucci et al. (2015)).”
The Impacts of Microfinance: Evidence from Joint-Liability Lending in Mongolia (2015, result): “…Banerjee et al. (2015) report a difference in short-term take-up between treatment and control group of 8.3 percentage points while in the study by Crépon et al. (2015) the difference was 10 or 16 percentage points depending on whether MFI or survey data are used. time at least 30 days late)…”
Social Learning and Incentives for Experimentation and Communication (2018, background): “Other deterrents examined by the literature recently include imperfections in credit markets (Croppenstedt et al., 2003; Crepon et al., 2015), insurance markets (Cole et al., 2013; Bryan et al., 2014; Karlan et al., 2015), land rights (Goldstein and Udry, 2008; Ali et al., 2011), and output markets…”
Financial Inclusion and Inclusive Growth: A Review of Recent Empirical Evidence (2017, unknown): “In Morocco, the expansion of microcredit to previously unserved rural villages resulted in the expansion of existing entrepreneurial activity in agriculture but did not result in new entrepreneurial activity.”
An Automatic Finite-Sample Robustness Metric: When Can Dropping a Little Data Make a Big Difference? (2020, background): “The selected studies are: Angelucci et al. (2015), Attanasio et al. (2015), Augsburg et al. (2015), Banerjee et al. (2015), Crépon et al. (2015), Karlan and Zinman (2011), and Tarozzi et al. (2015).”
Optimality of Matched-Pair Designs in Randomized Controlled Trials (2022, background): “See, for example, Duflo et al. (2007), Glennerster and Takavarasha (2013), and Crépon et al. (2015).”
Using agriculture for development: Supply- and demand-side approaches (2020, unknown): “There are African countries to look at for successful progress toward productivity growth in staple foods (Ethiopia in maize for the domestic market) and a rural transformation (Morocco exports of high value horticultural products and fruit to Europe; Ghana and Côte d’Ivoire cocoa exports; Ethiopia ”
The impact of microcredit on agricultural technology adoption and productivity: Evidence from randomized control trial in Tanzania (2020, background): “This paper contributes to the literature by conducting RCT to examine the impact of microcredit on the technology adoption and productivity of rice cultivation in Tanzania.”
Microfinance and economic development (2017, background): “In Morocco, Crépon et al. (2015) also find an increase in self-employment coupled with a drop in other forms of labor. The increase in business profit was thus offset by falling income from other labor, leaving no net gain in average household income and consumption. In rural Ethiopia, Tarozzi et al”