Microcredit Impacts: Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco

This paper presents the results of a large-scale clustered randomized trial conducted in north-central Sonora, Mexico to study the impacts of expanded access to microcredit on credit use. Compartamos Banco, the largest microlender in Mexico, implemented this experiment from 2009-2012. It rolled-out loan promotion across 238 geographic clusters (neighborhoods in urban areas, towns or contiguous towns in rural areas) which were previously not served. The paper makes the following observations:

• Increasing access to microcredit increases borrowing and does not crowd-out other loans;
• Loans seem to be used for both investment (in particular for expanding previously existing businesses) and risk management (through a reduction in asset fire sales);
• Evidence shows a positive average impact on business size, reliance on/need for aid, lack of depression, trust, and female decision making;
• Negative impacts are reductions in asset purchases and temptation goods. These results have normatively positive or neutral interpretations as well;
• Positive effects are not sweeping or transformative.