Microfinance and Household Poverty Reduction: New evidence from India

Katsushi Imai and Samuel Annim
Authors registered in the RePEc Author Service: Thankom Arun

No DP2010-14, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: The objective of the present study is to examine whether household access to microfinance reduces poverty. Using national household data from India, treatment effects model is employed to estimate the poverty-reducing effects of MFIs loans for productive purposes, such as investment in agriculture or non-farm businesses on household poverty levels. These models take into account the endogenous binary treatment effects and sample selection bias associated with access to MFIs. Despite some limitations, such as those arising from potential unobservable important determinants of access to MFIs, significant positive effect of MFI productive loans on multidimensional welfare indicator has been confirmed. The significance of treatment "effects" coefficients have been verified by both Tobit and Propensity Score Matching models. In addition, we found that loans for productive purposes were more important for poverty reduction in rural than in urban areas. However in urban areas, simple access to MFIs has larger average poverty-reducing effects than the access to loans from MFIs for productive purposes. This leads to exploring service delivery opportunities that provide an additional avenue to monitor the usage of loans to enhance the outreach.

Keywords: Microfinance; Poverty; Evaluation; India; Propensity Score Matching (search for similar items in EconPapers)
JEL-codes: C21 I30 I38 O16 R51 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2010-04
New Economics Papers: this item is included in nep-cwa, nep-dev and nep-mfd
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Citations: View citations in EconPapers (86)

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Related works:
Journal Article: Microfinance and Household Poverty Reduction: New Evidence from India (2010)
Working Paper: Microfinance and Household Poverty Reduction: New evidence from India (2010)
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