Is Microcredit a Blessing for the Poor? A Meta-analysis Examining Development Outcomes and Contextual Considerations

Increasing efforts aim at economic development and the reduction of poverty in developing countries through microcredit-enabled entrepreneurship. Following the award of the Nobel Peace Prize to Prof. Yunus, microcredit lending has risen to prominence and the volume of microcredit loans has increased substantially. However, theory on the outcomes of this financing form is controversial. Furthermore, the academic community lacks conclusive empirical evidence about the impact of such programs. Primary empirical studies report fragmented and to a large extent contradictory results. In this meta-analysis, we empirically synthesize a total of 545 quantitative empirical findings from 90 studies conducted to date. Our findings reveal a positive impact of microcredit on key development outcomes at the level of the client entrepreneurs. Additionally, we scrutinize how the development context influences the effectiveness of microcredit and find that microcredit generally has a greater impact in more challenging contexts. With our findings we contribute to research on the nexus of entrepreneurship and economic development, and offer recommendations for practitioners and academics working on this promising frontier.

Hypotheses/research question 
Is microcredit (MC) a good instrument to address credit constraints, enable entrepreneurial activity, and foster individual development? How does the development context, including country-level characteristics, affect the strengths of microcredit-outcome relationships? Hypothesis 1a: MC has a positive impact on the clients' venture survival. Hypothesis 1b: MC has a positive impact on the growth of the clients' ventures. Hypothesis 1c: MC has a positive impact on the profitability of the funded ventures. Hypothesis 2: MC has a positive impact on the personal financial well-being of clients. Hypothesis 3: MC has a positive impact on the health of client entrepreneurs and their families. Hypothesis 4: MC has a positive impact on the education level of client entrepreneurs' children. Hypothesis 5: MC has a positive impact on the empowerment of women client entrepreneurs.
Study design 
Meta-analysis
Reference 
Chliova, M., Brinckmann, J., & Rosenbusch, N., 2015. 'Is Microcredit a Blessing for the Poor? A Meta-analysis Examining Development Outcomes and Contextual Considerations'. Journal of Business Venturing, Elsevier, vol. 30(3), pages 467-487.