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.
Various. Among the most prominent variables: venture survival, venture growth, venture profitability, financial well-being of the clients, health of clients, education of the clients' children, and empowerment of female clients.
The effect of MC on venture survival is positive (r = .10, p < .10), yet marginally significant. Thus, there is only weak support for Hypothesis 1a. Findings corroborate the expectation that MC helps entrepreneurs achieve greater growth in their ventures (r = .08, p < .01) and increased profits (r = .11, p < .05), lending support to Hypotheses 1b and 1c, respectively. The effect of MC on financial well-being of entrepreneurs is also positive (r = .16, p < .01) supporting Hypothesis 2. The effect on health and nutrition (r = .08, p < .01) as well as education (r = .05, p < .01) of the clients and their families is positive, substantiating Hypotheses 3 and 4. MC has a positive impact on female empowerment (r = .21, p < .01), providing support for Hypothesis 5. Heterogeneity across studies is high for the majority of dependent variables. The proportion of "true heterogeneity" to total variance is over 75% for the majority of variables, suggesting the need for further moderator analysis. The relationship of MC-women's empowerment is the most consistent, while results are mixed regarding the impact of contextual factors on venture and financial outcomes.