Does Microfinance Reduce Rural Poverty? Evidence Based on Household Panel Data from Northern Ethiopia

G. Berhane, C. Gardebroek

Research output: Contribution to journalArticleAcademicpeer-review

43 Citations (Scopus)

Abstract

Evidence on the long-term impacts of microfinance credit is scarce.We use a unique four-round panel dataset on farm households in northern Ethiopia that had access to microfinance, observed on two key poverty indicators:household consumption and housing improvements.Fixed-effects and random trend models are used to reduce potential selection biases due to time-invariant unobserved heterogeneity and individual trends therein. Results show that borrowing indeed causally increased consumption and housing improvements. A flexible specification that takes into account repeated borrowings also suggests that borrowing has cumulative long-term effects on these outcomes, implying that short-term impact estimates may underestimate credit effects.
Original languageEnglish
Pages (from-to)43-55
JournalAmerican Journal of Agricultural Economics
Volume93
Issue number1
DOIs
Publication statusPublished - 2011

Keywords

  • social programs
  • impact
  • microcredit
  • bangladesh

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