Although microfinance has grown rapidly over recent years, hard evidence on its socio-economic impact is only emerging slowly. To what extent does microfinance lift people out of poverty by allowing them to generate income from small-scale enterprises? And is group lending ('joint-liability') or individual lending the best way to reach out to poor borrowers? These are questions that researchers at Edepo are currently addressing, in collaboration with EBRD.

This project involves a randomised field experiment to measure the impact of microcredit on poverty reduction among poor rural women in Mongolia. The experiment consists of two 'treatments': a group lending product with group responsibility (so-called 'joint liability') and an individual loan product. Some households receive no loans ('controls'). In the group loan program, the group is liable ('joint liability') whereas in the individual loan program the individual is liable. The purpose of the loans is to provide finance for working capital or fixed assets for women's micro-entrepreneurial activities.

The experiment has taken place in 40 soums (or subdivisions of provinces) across five aimags (or provinces) in Mongolia, between March 2008 and October 2009. Of these 40 soums, there are 15 individual loan treatment soums, 15 group loan treatment groups, and 10 control soums. Pre- and post-programme data has been collected.