Understanding the Average Impact of Microcredit Expansions: A Bayesian Hierarchical Analysis of Seven Randomized Experiments

Despite evidence from multiple randomized evaluations of microcredit, questions about external validity have impeded consensus on the results. I jointly estimate the average effect and the heterogeneity in effects across seven studies using Bayesian hierarchical models. I find the impact on househol...

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Bibliographic Details
Published in:American economic journal. Applied economics 2019-01, Vol.11 (1), p.57-91
Main Author: Meager, Rachael
Format: Article
Language:English
Subjects:
Bayesian analysis
Business
Consumption
Heterogeneity
Households
Microfinance
Sampling
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Summary:Despite evidence from multiple randomized evaluations of microcredit, questions about external validity have impeded consensus on the results. I jointly estimate the average effect and the heterogeneity in effects across seven studies using Bayesian hierarchical models. I find the impact on household business and consumption variables is unlikely to be transformative and may be negligible. I find reasonable external validity: true heterogeneity in effects is moderate, and approximately 60 percent of observed heterogeneity is sampling variation. Households with previous business experience have larger but more heterogeneous effects. Economic features of microcredit interventions predict variation in effects better than studies’ evaluation protocols.
ISSN:1945-7782
1945-7790
DOI:10.1257/app.20170299