On the Impact of Microcredit: Evidence from a Randomized Intervention in Rural Ethiopia

Northeast Africa

Ethiopia

Labour Market

Microcredit

A Tarozzi, J Desai, K Johnson

2015

Jaikishan Desai & Kristin Johnson & Alessandro Tarozzi, 2013. "On the Impact of Microcredit: Evidence from a Randomized Intervention in Rural Ethiopia," Working Papers 741, Barcelona Graduate School of Economics.
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Family Health International. https://www.fhi360.org/

2013

N. A.

2003 – 2006 (baseline and enline)

The main focus of the RCT was on fertility choices and contraception, and its primary purpose was to determine whether linking microcredit with family planning services could increase the use of contraceptives beyond what each program could accomplish separately.

Loan eligibility was supposed to be selected based on several criteria, of which the presence of a viable business plan and poverty status were the more salient ones.

The study was conducted over a large area encompassing 133 administrative areas called `peasant associations’ (PAs), using a 2_2 factorial design where PAs were randomly assigned to one of four groups: micro-lending only, FPP only, both, and none (control).

• School attendance
• Child labour

RCT

Study design: In each of the 133 study PAs, interview teams obtained a complete list of all villages with an estimate of the total number of households in each village. If the PA had more than 400 households, three villages were randomly selected. If the PA had fewer than 400 households, two villages were selected at random. Within each selected village, interview teams conducted a complete enumeration of households, and a random sample of households was chosen to participate. In all, 3240 households were selected and 3216 interviews (99.3%) were completed in Oromiya. In Amhara, 3200 households were selected and 3068 interviews (96%) were completed. The sample is not self-weighted and sampling weights produce unbiased estimates of population statistics.
Sample: final sample size, 3528, with 23 observations (< 1%) dropped because of missing values in one or more of the predictors.
Survey Instrument: household surveys at baseline and follow-up measured a broad range of outcomes, including income-generating activities, livestock ownership, schooling, and measures of women\'s empowerment. Each survey was conducted by interviewing about 6,000 households, with a similar sample size from the treatment and control regions. At follow-up, interviewers re-visited the same study villages, but they did not seek to re-interview the same households, so our data constitute a panel of villages but not of households. Baseline and follow-up samples were drawn independently of each other, and independently of program participation.

The microfinance program increased borrowing substantially, but mixed evidence of improvements has been found in several socio-economic outcomes, including schooling.

Child Labour

Households

Local

The intervention did not change child labour outcomes.

The microfinance program increased borrowing substantially, but mixed evidence of improvements has been found in several socio-economic outcomes, including schooling.

Child labour has not decreased as a result of the program.