Entrepreneurship


Original abstracts from the papers in the database are provided below. All abstracts are drawn directly from the papers referenced. Links to access the papers are provided, although
the papers may also be available from other web sources. By providing links to other sites, the United Nations Foundation and ExxonMobil Foundation do not guarantee, approve, or endorse the information or products available on these sites.

  • Microfinance in Northeast Thailand: Who Benefits and How Much?

    Coleman (2006)

    Original abstract:

    This paper evaluates the outreach and impact of two micro_nance programs in Thailand, controlling for endogenous self-selection and program placement. Results indicate that the wealthier villagers are signi_cantly more likely to participate than the poor. Moreover, the wealthiest often become program committee members and borrow substantially more than rank-and-_le members. However, local information on creditworthiness is also used to select members. The programs positively a_ect household welfare for committee members, but impact is insigni_cant for rank-and-_le members. Policy recommendations include vigilance in targeting the poor, publicly disseminating the program rules and purpose, and introducing and enforcing eligibility criteria.

    Intervention settings: Rural/

    Intervention description: Credit. Some savings, which may be used to provide loans.

    Methodology: Pipeline design, panel data of participating and non-participating HH and moderate robustness.

    Sample: 445 households. Most engage in small-scale agriculture (91.3% of women and 90.4% of men surveyed listed farming as primary or secondary occupation).

    Findings: Positive impact on savings and business revenues of wealthier women members (no impact on poorer women). Increased business sales among wealthier members (no impact on poorer women). Wealthier women were more likely to participate in village banks than poor women (mistargeting).

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  • Expanding Credit Access: Using Randomized Supply Decisions to Estimate the Impacts

    Karlan and Zinman (2010)

    Original abstract:

    Expanding access to commercial credit is a key ingredient of financial development strategies. There is less consensus on whether expanding access to consumer credit helps borrowers, particularly when loans are extended at high interest rates. Popular skepticism about "unproductive," "usurious" lending is fueled by research highlighting behavioral biases that may induce overborrowing. We estimate the impacts of expanding access to consumer credit at a 200% annual percentage rate (APR) using a field experiment and follow-up data collection. The randomly assigned marginal loans produced significant net benefits for borrowers across a wide range of outcomes. There is also some evidence that the loans were profitable.

    Intervention settings: Urban.

    Intervention description: Individual credit with median loan size of $127, 40% of average borrower's gross monthly income. Assessed impact of offering access to individual loans to marginal clients who otherwise would have been rejected.

    Methodology: RCT.

    Sample: Poor men and women wage workers.

    Findings: Positive impact of access to credit on clients' retention of jobs (loans likely helped clients smoothe or avoid shocks that prevent them from getting to work). Positive impact of access to credit on HH incomes. Loans increased HH food consumption. Reported experiencing increased HH decision-making (though small sample size of married women and imprecise estimate). No significant difference in impact of credit assigned to men and women.

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  • Impact of Microcredit in Rural Areas of Morocco: Evidence from a Randomized Evaluation

    Crepon et al (2011)

    Original abstract:

    Microcredit has rapidly expanded in the past years, providing access to financial services to a large population previously excluded from the financial system. However, whether it helps the poor has been a subject of intense debate on which, until very recently, there was no rigorous evidence. This paper reports the results of a randomized experiment designed to measure the impact of microcredit in rural areas of Morocco. Within the catchment areas of new MFI branches opened in areas that had previously no access to microcredit, 81 pairs of matched villages were selected. The treatment villages, randomly selected within each pair, were offered microcredit just after Al Amana opened the branch, while the control villages were offered access only two years later. Al Amana program increased access to credit significantly. Its main effect was to expand the scale of existing self-employment activities of households, for both non-livestock agriculture and livestock activities. We find little or no effect on average consumption as well as on other outcomes such as health, education, etc. However, treatment effects are heterogeneous depending on whether the households had an existing self-employment activity at baseline. Households that had a pre-existing activity decrease their non-durable consumption and consumption overall, as they save and borrow to expand their activities. Households that had not a pre-existing activity increase food and durable expenditure and no effects on business outcomes are observed.

    Intervention settings: Rural

    Intervention description: A randomly selected half of 82 paired villages in the catchment areas of newly opened microfinance branches with no previous access to microcredit were offered microcredit (group liability loans), with the remaining villages receiving the same offer two years later.

    Methodology: RCT

    Sample: 4,495 households in 80 pairs of villages.

    Findings: 13% increase in HH having a microfinance loan in the treatment villages. Both livestock and non-livestock agricultural activities expanded in the treatment villages (limited to households with a business activity pre-intervention). No effect on average household consumption, poverty or on other outcomes such as health and education. The majority of borrowers were men, and there was no measurable effect on women's empowerment.

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  • Microcredit in Theory and Practice: Using Randomized Credit Scoring for Impact Evaluation

    Karlan and Zinman (2011)

    Original abstract:

    Microcredit institutions spend billions of dollars fighting poverty by making small loans primarily to female entrepreneurs. Proponents argue that microcredit mitigates market failures, spurs micro-enterprise growth, and boosts borrowers' well-being. We tested these hypotheses with the use of an innovative, replicable experimental design that randomly assigned individual liability microloans (of $225 on average) to 1601 individuals in the Philippines through credit scoring. After 11 to 22 months, we found evidence consistent with unmet demand at the current price (a roughly 60% annualized interest rate): Net borrowing increased in the treatment group relative to controls. However, the number of business activities and employees in the treatment group decreased relative to controls, and subjective well-being declined slightly. We also found little evidence that treatment effects were more pronounced for women. However, we did find that microloans increase ability to cope with risk, strengthen community ties, and increase access to informal credit. Thus, microcredit here may work, but through channels different from those often hypothesized by its proponents.

    Intervention settings: Urban

    Intervention description: Individual credit with median loan size of $220, 37% of average borrower's net monthly income. Assessed impact of offering access to individual loans to marginal clients who otherwise would have been rejected.

    Methodology: RCT

    Sample: Less poor microentrepreneurs (incomes higher than poverty line)

    Findings: Credit enabled clients to better manage economic risk. No conclusive evidence on business revenue. Negative impact on number of businesses of both women and men clients. Negative effect on the number of employees of both women and men clients.

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  • Impact of Microcredit in RuralAreas of Morocco: Evidence from a RandomizedEvaluation

    Crèpon et al (2011)

    Original abstract:

    Microcredit has rapidly expanded in the past years, providing access to financial services to a large population previously excluded from the financial system. However, whether it helps the poor has been a subject of intense debate on which, until very recently, there was no rigorous evidence. This paper reports the results of a randomized experiment designed to measure the impact of microcredit in rural areas of Morocco. Within the catchment areas of new MFI branches opened in areas that had previously no access to microcredit, 81 pairs of matched villages were selected. The treatment villages, randomly selected within each pair, were offered microcredit just after Al Amana opened the branch, while the control villages were offered access only two years later. Al Amana program increased access to credit significantly. Its main effect was to expand the scale of existing self-employment activities of households, for both non-livestock agriculture and livestock activities. We find little or no effect on average consumption as well as on other outcomes such as health, education, etc. However, treatment effects are heterogeneous depending on whether the households had an existing self-employment activity at baseline. Households that had a pre-existing activity decrease their non-durable consumption and consumption overall, as they save and borrow to expand their activities. Households that had not a pre-existing activity increase food and durable expenditure and no effects on business outcomes are observed.

    Intervention settings: Rural.

    Intervention description: Group-liability credit.

    Methodology: RCT, tested impact of new MFI branches and rigorous.

    Sample: Majority are poor men; small sub-sample of poor women.

    Findings: Increased revenues, profits and number of employees of clients' existing non-livestock agricultural businesses (no impact on non-agricultural enterprises).Expanded scale of existing HH self-employment activities. No impact on new business creation or hours spent in self-employment. Higher earnings from business offset by lower income from wage labor. No significant impact on total per capita expenditure (point estimate negative). Mixed results on HH entrepreneurial engagement: positive impact on scale of activities, and in revenues/income from non-livestock agricultural activity only. No impact on women's empowerment; poverty or average per capita short-term consumption; HH likelihood of starting a new business; number of HH activities managed by women, women's decision-making power within HH or women's mobility. Lower earnings from wage labor, suggesting lower labor supply into wage-work.

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