Microcredit and microenterprise performance: impact evidence from Peru
Ever since researchers began to measure the impact of microcredit in the 1980s, there have been mixed messages: some studies suggest microcredit has a positive effect on the poor, others not. This article adds to the body of evidence: clients receiving microcredit from Mibanco, Peru, were compared with similar businesses not receiving credit. In particular, changes between 1997 and 1999 in enterprise revenue, enterprise fixed assets, employment and transaction relationships were measured for the two groups. The method was based on the household economic portfolio model, which takes into account the resources and activities of the entire household, rather than a single business. For this study, the performance of up to three household enterprises was monitored. Other methodological difficulties, such as selection bias, are discussed. Results show that, in spite of a difficult economic environment, client enterprises performed better than non-client enterprises in terms of enterprise profits, fixed assets and employment. Case study evidence reveals that some client enterprises were able to benefit from discounts when they made bulk purchases from suppliers. Analysis also reveals that the enterprise named in the credit application is not the only household business that benefits from the microcredit.