Does microfinance elevate poverty? Does family size matter in the provision of microcredit? Evidence from a randomised evaluation

Rahimi, Lutfi (2015): Does microfinance elevate poverty? Does family size matter in the provision of microcredit? Evidence from a randomised evaluation.

Abstract

This paper looks at randomised assessment of microcredit intervention through Spandana in Hyderabad, India. It looks at households with six or more than six members as a restricting conditioning to see whether provision of microcredit affects them differently. This paper finds significant differences in the way which smaller and bigger families allocate their additional resource received in the form of microcredit intervention. As stated above, bigger households spend more on durable goods as soon as they received a loan whereas smaller households do not emphasis on increasing household stocks. These results are revealing on how different households prioritise their expenditure categories and thus may serve as a guide to microcredit institutions on how to provide tailored credit packages. Likewise, intuitively bigger households had higher borrowing levels compared to smaller households . Furthermore, this paper concludes that smaller households increase their borrowing from banks and informal sources as well. The reasons behind this contrast maybe due to unconsidered factors in this study such as existing family businesses, household preferences or loan provider criteria.

• Item Type: MPRA Paper
• Language: English
• Keywords: Keywords: microfinance, microcredit, poverty elevation, family size
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages

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