Review of methodological approaches to the study of the impact of microenterprise credit programs

The review covers eleven studies carried out in Asia, Africa, and Latin America. It focuses on sample design and execution, temporal issues, analytical techniques, and control methods for eliminating alternative explanations for changes. After discussing the ways in which previous studies have addressed each topic, the authors provide recommendations for the AIMS impact assessments. Several issues complicate selection of an appropriate methodology for studying the impacts of microenterprise program credit. Two predominate. The first is the issue of fungibility, since credit and other resources may be used for both enterprise and household purposes. The second is the issue of selectivity bias, since both the borrower and the lender "select" participation, which means that loan recipients are decidedly non-random. Debate surrounds program evaluation methodology. Both quantitative and qualitative methodologies have been used, both have positive and negative aspects, and both have achieved acceptance. Valid evaluations can be achieved through a variety of approaches. The papers reviewed for this study indicate that significant "norming" has occurred in the field of microenterprise program impact research on many issues, such as reducing selection bias and improving controls. Some issues, such as fungibility, remain problematic. Methodology "drives" some studies. More care must be taken to fully specify study objectives and to allow these objectives to dictate the types of data that are collected and the methodology that is used. (Author abstract)