The Impacts of Microcredit: Evidence from Bosnia and Herzegovina

Abstract

We use an RCT to analyze the impacts of microcredit. The study population consists of loan applicants who were marginally rejected by an MFI in Bosnia. A random subset of these were offered a loan. We provide evidence of higher self-employment, increases in inventory, a reduction in the incidence of wage work and an increase in the labor supply of 16–19-year-olds in the household’s business. We also present some evidence of increases in profits and a reduction in consumption and savings. There is no evidence that the program increased overall household income.

Keywords: Microfinance; liquidity constraints; human capital; randomized controlled trial

JEL Classification: O16, G21, D21, I32