Promoting easy access to microfinance for urban poverty alleviation
This paper measures the impact of microcredit using randomized controlled trials among selected groups of people living in the Kibera slum in Nairobi. It uses double difference and propensity score matching to evaluate the impact of financial services on businesses, households, MFIs, and urban sustainability outcomes. The study was conducted in collaboration with Umande Sacco and Cooperative Bank, two institutions that provide microcredit services in the study area. A baseline survey was conducted before the treatment. Further, a follow-up study was conducted after 18 months. Although the study focuses on the impact of financial access on the poor, it also investigates other aspects like prior business experience, gender, and group investment impacts. It finds little evidence of the impact of microcredit on urban sustainability outcomes, but suggests that there is a significant, although small, improvement on business and household outcomes. The paper covers the following sections in detail:
Scope of the study;
Access to financial services and expectations;
Methodology and monitoring;
Empirical analysis and evaluation;
Results from the randomized controlled trials with a focus on impacts on social welfare, business outcomes, MFI's, and urban sustainability;
Conclusion and a discussion on implications for business and policy.