We use a randomised controlled trial (RCT) to analyse the impact of microcredit on poverty reduction in Bosnia and Herzegovina. The study population are loan applicants that would normally have just been rejected based on regular screening. We find that access to credit allowed borrowers to start and expand small-scale businesses. Households that already had a business and where the borrower had more education, ran down their savings, presumably to complement the loan and to achieve the minimum amount necessary to expand their business. In less-educated households, however, consumption went down. A key new result is that there was a substantial increase in the labour supply of young adults (16-19 year olds). This was accompanied by a reduction in school attendance.
Authors
Research Fellow Yale University
Costas is a Research Fellow of the IFS and a Professor of Economics at Yale University and a Visiting Professor at University College London.
Heike Harmgart
Associate Director
Britta is an IFS Associate Director, Associate Staff at the Department of Economics at the UC and Researcher at NIHR Obesity Policy Research Unit.
Ralph De Haas
Report details
- Publisher
- European Bank for Reconstruction and Development
Suggested citation
Augsburg, B et al. (2012). Microfinance at the margin: experimental evidence from Bosnia and Herzegovina. London: European Bank for Reconstruction and Development. Available at: https://ifs.org.uk/publications/microfinance-margin-experimental-evidence-bosnia-and-herzegovina (accessed: 19 March 2024).
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