Assets and the impact of microenterprise finance programs

The paper focuses on the nature of assets, whether assets are an important impact category, and on approaches to measuring assets. It also examines measurement issues. The findings are intended to inform the assessments undertaken by the Assessing the Impacts of Microenterprise Services (AIMS) Project and other endeavors to study the impacts of microenterprise programs. The paper summarizes findings from 32 studies on the impact of microenterprise credit programs on asset accumulation. These studies document positive impacts, but the nature and extent of the impacts vary. To date, more attention has been given to enterprise rather than household assets. No studies report on the accumulation of assets by the client, but some assess increased control over assets. Very few studies relate the wealth level of the client or client household to the impacts. Nevertheless, the studies repeatedly suggest that asset accumulation is incremental, and successive microenterprise program loans lead to a build up of enterprise and household assets This paper begins with a discussion of the concept of assets and a categorization scheme. The characteristics and qualities of assets, and the relationship of assets to income and expenditure are explored. The next part sets out the importance of assets as an impact category in the assessment of the impacts of microenterprise (ME) programs. This section ends with a summary of the findings on asset accumulation from ME program evaluations and assessments. The next section examines approaches to studying assets. It addresses the different uses of an asset variable in the assessment of ME programs. It continues with a focus on ways assets have been covered in previous ME studies and approaches used to measure assets. The section concludes with a discussion of key measurement issues. The final section centers on the implications for the AIMS core impact assessments. It sets out the basic parameters that guide the recommendations which follow, and discusses trade-offs in coverage and measurement. Hypotheses are recommended and approaches to studying these suggested. The paper concludes with recommendations for testing the hypotheses and measures of them during the AIMS field focused research. (Author abstract)