Social Impact Assessment of Microfinance Programmes - weman

loans and might have increased consumption due to better liquidity. This aspect would
lead to a smaller value of δ or the impact reported on the variable of interest.
Furthermore, the areas in which our selected MFIs were working were predominantly
urban areas; in fact a large proportion of their work was within the same urban centres of
Lahore and Karachi. This caused problems in selecting the control groups and localities
as there are almost 90,000 borrowers in Lahore with 66 MFI offices while in Karachi
there are over 22,000 borrowers with 46 MFI offices 1 . Therefore, the knowledge and
accessibility of microfinance in these areas is enormous. This made it impossible to find
areas which were unexposed to microfinance and therefore precision of δ might be
compromised. However, effort was made to find control areas where microfinance was
not pervasive so that we could compute δ with accuracy.
The final estimation equation is as follows:
Y ij = X ij α + C ij β + M ij γ + T ij δ +v ij (2)
Equation (2) is similar to equation (1), except for the dummy C equal to 1 for clients and
matched neighbours and equal to 0 for the pipeline clients and their matched neighbours.
This dummy will take into account the heterogeneity between the two groups specified
above and the localities they live in. In addition to the DID estimates we will also report
the Single Difference estimates which compare only the active borrowers and the pipeline
clients as all conditions of the DID model are not strictly met due to problems with data
collection as mentioned above.
The equation used for estimation of Single Difference is
Y ij = X ij α + T ij δ +v ij (3)
Where δ is the parameter of interest and captures the impact experienced by active
borrowers on different outcomes as compared to pipeline clients.
2.6 Format and Structure of the Report
After the first Chapter on the introduction and background to the study, followed by this
second Chapter on methodology and sample design, we move on to the results
component of the Report. Our results are presented for each of the participating
institutions separately in the next six chapters – Chapter 3-8 – where we show the results
for each institution. Our interest (and that of the EU-PFSSRP as they state in the Terms
of Reference) is focused not on a general, broad, social and economic impact analysis on
microfinance interventions in Pakistan, but on the impact of specific institutional
interventions. Hence, we do not analyse pooled data for the study, but present our results
separately in each Chapter. However, the concluding last Chapter, does present some
1 Pakistan Microfinance Network, “Microwatch: A quarterly update on Microfinance in Pakistan” Issue 01:
October 2006
16