More materials about Biodiversity and Finance, Climate Change Finance, Sustainable and Responsible Investment & Sustainable Financial Economy
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
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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