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

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.

Crèpon et al (2011)Rural.RCT, tested impact of new MFI branches and rigorous.Group-liability credit.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.Majority are poor men; small sub-sample of poor women.