Overview of studies on the impact of microenterprise credit

Special attention is given to variables and measures related to household economic security, enterprise stability and growth, and individual control over resources, since these impact areas are emphasized in the framework of the Assessing the Impact of Microenterprise Services (AIMS) Project. The AIMS mandate is to focus on ways microenterprise services strengthen enterprises and enhance the economic security and quality of life of clients and their households. This desk study reviews the findings from 32 research and evaluation reports on the impact of microenterprise services, primarily credit. The overview covers findings from survey research and case studies of 41 programs in 24 countries in Asia, Africa, and Latin America. The criteria for selecting impact studies to include in the review included: studies of programs that provide financial services to microentrepreneurs; studies that consider impacts at the household, enterprise, individual or community levels; and, studies that addressed the question of impacts in a systematic and thoughtful manner. Most of the studies were supported by development agencies. The earlier studies focus on enterprise productivity and growth, reflecting the program objectives and emphasis. The more recent studies look beyond the enterprise. Many of the early efforts to study microenterprise program impacts involved case studies and before/after surveys of borrowers. Since 1990, a growing number of impact studies have used a quasi-experimental design in an effort to separate the effect of credit from other factors that may be promoting or inhibiting changes. Nineteen of the 32 studies included in the review used a quasi-experimental research design. While it is difficult to compare the findings from different programs and different regions, some common patterns do emerge from the 32 studies. Overall, each suggests varying degrees of positive impact on program participants, most significantly increased income. In addition, many of the studies show important non-income changes, notably, increases in assets, household security, and improved consumption. The studies show mixed effects upon employment, children s schooling, and women s empowerment. While the programs are effective in reaching large numbers of poor households and women, credit has a differential impact on groups within the poor. Finally, the studies often refer to factors outside of program interventions, such as economic conditions or policies, which have profound influence on microentrepreneurs, their enterprises, and households. (Author abstract)