Discussion Paper: Effects of Microcredit on the Poverty of Borrowers

Please click here to download the discussion paper Effects of Microcredit on the Poverty of Borrowers using the Progress out of Poverty Index: Evidence from Asian MFIs

Authors

Robin Gravesteijn (Oikocredit), Andreas G. F. Hoepner (University of Reading), Mayank K. Jain (Oikocredit)

Date

October 2015

Abstract

This discussion paper uses unbalanced panel data from more than one million poverty records spanning more than four years to analyse the influence of microcredit on poverty of borrowers in India and the Philippines. The uniqueness of this paper is its use of the Progress out of Poverty Index (PPI) for poverty measurement. We apply a fixed-effects regression model to study the effect of microfinance on the poverty of microcredit borrowers over time at individual level, and pooled OLS regression to analyse factors associating with client’s poverty. The econometric analysis suggests that microfinance loans have a small positive and significant effect on poverty reduction among microcredit borrowers.  Other variables such as annual household income, and individual attributes such as location and occupation also explain poverty changes.

Presentations

This discussion paper has so far been presented at:

  • European Microfinance Week in Luxembourg
  • Frankfurt School of Finance
  • Yunus School of Social Enterprise in Glasgow