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Teaching Material

The Miracle of Microfinance? Evidence from a Randomized Evaluation

Target GroupMasterResource TypeResearch ArticleDomainBiodiversity and Finance, Climate Change Finance, Sustainable and Responsible Investment, Sustainable Financial EconomyDuration1h to ≤ 2hAuthorAbhijit Banerjee, Esther Duflo, Rachel Glennerster, Cynthia Kinnan
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Summary

This influential randomized evaluation by Banerjee, Duflo, Glennerster, and Kinnan analyzes the impact of a microcredit program in Hyderabad, India. It increased credit take-up by 8.4 percentage points, boosted small-business investment and profits, and raised durable goods expenditure, while reducing spending on temptation goods. However, consumption, health, education, and women’s empowerment showed no significant improvements. After two years, differences between treatment and control groups largely dissipated. The study provides nuanced evidence on microfinance’s limited long-term transformative power

Relevant SDGs

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How to use

In economics, development, or public policy courses, use this study to examine empirical evaluation methods like randomized control trials and their role in impact assessment. Assign students to summarize key findings, critique methodology, and compare short- versus long-term effects. Encourage debate on microfinance’s efficacy as a poverty alleviation strategy, analyzing changes in durable goods, temptation spending, and welfare. Use this case to model cost-benefit or welfare analysis exercises. Supplement discussions with partner studies such as the Morocco experiment to evaluate context specificity. Reinforce lessons on evidence-based policy design and realistic expectations for financial inclusion programs.

Teaching format tip

Research Article

Provide reading guides focusing on methodology, evidence quality, and logical structure. Students should identify key arguments, evaluate supporting evidence, and assess limitations. Use articles as springboards for generating research questions or comparing methodological approaches. Have students present critical analyses to peers, emphasizing how findings connect to broader theoretical frameworks.

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  • Resources
    Subject area
    • General KnowledgeThis section provides general frameworks and concepts related to sustainability that can be used in any discipline and across industries.
    • Specific KnowledgeThis section provides sustainability related content that would enable students following a business or management degree or course to be better equipped to face sustainability related challenges.
      • Economics
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      • Finance, banking, insurance
      • Marketing and advertising
    Competence area
    • Problem-solving
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    • Self-awareness
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    • Systems thinking
    • Strategy
    Learning approach
    • Cognitive learning
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    • Subject area
      • General KnowledgeGeneral knowledge represents foundational understanding across multiple disciplines needed for sustainable development. It creates an integrated mindset that connects basic and advanced topics across various knowledge domains.
      • Economics
      • Management
      • Finance, banking, insurance
      • Marketing and advertising
    • Skill area
      • Problem-solving
      • Critical thinking
      • Self-awareness
      • Collaboration
      • Normative awareness
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      • Systems thinking
      • Strategy
    • Learning approach
      • Cognitive learning
      • Socio-emotional learning
      • Behavioural learning
  • Communities
  • Education for sustainability
  • About us
  • Resources
    Subject area
    • General KnowledgeThis section provides general frameworks and concepts related to sustainability that can be used in any discipline and across industries.
    • Specific KnowledgeThis section provides sustainability related content that would enable students following a business or management degree or course to be better equipped to face sustainability related challenges.
      • Economics
      • Management
      • Finance, banking, insurance
      • Marketing and advertising
    Competence area
    • Problem-solving
    • Critical thinking
    • Self-awareness
    • Collaboration
    • Normative awareness
    • Anticipatory thinking
    • Systems thinking
    • Strategy
    Learning approach
    • Cognitive learning
    • Socio-emotional learning
    • Behavioural learning
    • Subject area
      • General KnowledgeGeneral knowledge represents foundational understanding across multiple disciplines needed for sustainable development. It creates an integrated mindset that connects basic and advanced topics across various knowledge domains.
      • Economics
      • Management
      • Finance, banking, insurance
      • Marketing and advertising
    • Skill area
      • Problem-solving
      • Critical thinking
      • Self-awareness
      • Collaboration
      • Normative awareness
      • Anticipatory thinking
      • Systems thinking
      • Strategy
    • Learning approach
      • Cognitive learning
      • Socio-emotional learning
      • Behavioural learning
  • Communities
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  • About us
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