This note reviews innovations in the provision of credit.

This paper explores the implications of voluntary reporting on knowledge of microfinance, using specific data from the MixMarket and the Microcredit Summit. The authors find that while both organizations aspire to provide a broad, global set of data, different trends in the reported data influence our analyses and lead to different conclusions depending on the dataset used.

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Replication of seminal studies on the impact of microfinance.

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Uses data from SafeSave, a credit cooperative in the slums of Dhaka, Bangladesh, to examine how sensitive borrowers are to increases in the interest rate on loans.

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Group liability in microcredit purports to improve repayment rates through peer screening, monitoring, and enforcement. However, it may create excessive pressure, and discourage reliable clients from borrowing. Two randomized trials tested the overall effect, as well as specific mechanisms. The first removed group liability from pre-existing groups and the second randomly assigned villages to either group or individual liability loans. In both, groups still held weekly meetings. We find no increase in default and larger groups after three years in pre-existing areas, and no change in default but fewer groups created after two years in the expansion areas.

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The book reports on the yearlong "financial diaries" of villagers and slum dwellers in Bangladesh, India, and South Africa--records that track penny by penny how specific households manage their money. The stories of these families are often surprising and inspiring. Most poor households do not live hand to mouth, spending what they earn in a desperate bid to keep afloat. Instead, they employ financial tools, many linked to informal networks and family ties. They push money into savings for reserves, squeeze money out of creditors whenever possible, run sophisticated savings clubs, and use microfinancing wherever available.

Chapter 1 available in English, French and Spanish.

Most academic and development policy discussions about microentrepreneurs focus on credit constraints, and assume that subject to those constraints the entrepreneurs manage their business optimally. Yet the self-employed poor rarely have any formal training in business skills. A growing number of microfinance organizations are attempting to build the human capital of micro-entrepreneurs in order to improve the livelihood of their clients and help further their mission of poverty alleviation. Using a randomized control trial, we measure the marginal impact of adding business training to a Peruvian group lending program for female microentrepreneurs. Treatment groups received thirty to sixty minute entrepreneurship training sessions during their normal weekly or monthly banking meeting over a period of one to two years. Control groups remained as they were before, meeting at the same frequency but solely for making loan and savings payments. We find evidence that the treatment led to limited improvements in business knowledge, practices and revenues. For the microfinance institution, the program increased client retention rates. There is also suggestive evidence that effects were larger for those that expressed less interest in training before the program began. This could have important implications for implementing similar market-based interventions with a goal of recovering costs.

This paper reports on the first randomized evaluation of the impact of introducing microcredit in a new market in the slums of Hyderabad, India.

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