Is microcredit a blessing for the poor? A meta-analysis examining development outcomes and contextual considerations

Myrto Chliova, Jan Brinckmann, Nina Rosenbusch

Research output: Indexed journal article Articlepeer-review

109 Citations (Scopus)

Abstract

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.

Original languageEnglish
Pages (from-to)467-487
Number of pages21
JournalJournal of Business Venturing
Volume30
Issue number3
DOIs
Publication statusPublished - 1 May 2015
Externally publishedYes

Keywords

  • Base of the pyramid
  • Development entrepreneurship
  • Human development
  • Microcredit
  • Microloans

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