Social Impact Assessment of Microfinance Programmes - weman

Where Y ij is an outcome on which we measure impact for household i in locality j, X ij is
a vector of household characteristics, 5 C ij is a dummy equal to 1 for active borrowers and
their matched neighbours and 0 otherwise, M ij is a membership dummy variable equal to
1 if household i self-selects into the credit programme, and 0 otherwise; and T ij is a
variable to capture the treatment effects on households that self selected themselves into
the programme and are already accessing loans. T is also a dummy variable equal to 1 for
active borrowers and 0 otherwise. As 86 percent of Asasah clients in our sample are
either in their first loan cycle or second, we do not control for number of loans taken as
there are not significant differences between the clients in the two different loan cycles.
The coefficient δ on T ij is the main parameter of interest and measures the average impact
of the programme. A positive and significant δ would indicate that microfinance is
having a beneficial effect on the borrowers.
A Single Difference equation is also estimated to assess impact between active borrowers
and the pipeline clients. The form of the equation is as follows and the variables are
defined as stated above.
Y ij = X ij α + T ij δ +v ij
The results from the estimation for δ are given in Table 3.7. The majority of the results in
our regressions were insignificant. One significant result in our DID estimation was that
active borrowers save less than other categories of respondents (-265; p=0.06). This
might be due to the fact that they have to give in the loan instalment on top of their other
expenditures and this leaves them with little money to save every month. The other
results from DID estimation that are significant all relate with empowerment. We find
that on average active borrowers score 5 points more on the Overall Empowerment Index
compared with other respondents (4.7; p=0.004). Active borrowers also perform better on
three other empowerment indices as listed in the results table (Economic Empowerment
1.3, p=0.02; Asset Empowerment 0.46, p=0.08; Empowerment related to health and
education 2.38, p=0.00).
However, in the single difference estimates the empowerment results are not significant
except for social empowerment and on that index active borrowers perform worse than
pipeline clients (0.89; p=0.00). The difference between single difference and DID
estimates implies that both active and pipeline borrowers as a group are more empowered
than the non-borrowers. This is validated by the significance of the member dummy (M)
in the DD estimates on empowerment indices as it captures the impact of unobservable
variables (e.g. preferences) that are common to those respondents that self-select
themselves into a microfinance programme.
The other estimates that are significant in Single Difference estimation pertain to
educational expenditure and school enrolment. The treatment dummy on educational
expenditure is -97.28 which is significant at the 5% level and implies that active
5 For Asasah seven household characteristics were included in the regression out of 15 tested through
ANOVA.
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