Microfinance Banks and Household Access to Finance

2010 Low income measures whether the household’s income is below the 2006 countrymedian.We perform a one-to-one match, i.e. each household in the 2006 LITS survey is matchedto one household covered by the LITS 2010 survey. LITS 2006 households that cannot bematched to a LITS 2010 household are dropped. Likewise, LITS 2010 households that cannotbe matched to a LITS 2006 household are also dropped. In addition, we drop all observationsthat have missing values for at least one of the dependent or independent variables. As shownin Table 5 Panel A, our matching process generates a total sample of 2,613 potentialhousehold pairs for our synthetic 2006-2010 panel.[Insert Table 5 here]To identify the impact of new ProCredit bank branches opened between 2006 and 2010,we drop 1,009 household pairs which were already close to ProCredit bank branches in 2006.We further consider only household pairs for which the closeness to a retail bank branch doesnot change between 2006 and 2010. We thus drop 110 household pairs for which closeness toa branch of the retail bank changed in our observation period. This leaves us with a totalsynthetic panel of 1,494household pairs in two sub-samples: 477 pairs which are alreadywithin a 5km radius of a retail bank branch in 2006 as well as 1,017 household pairs whichare not within a 5km radius of a retail bank branch in 2006 and 2010. Table 5, Panel Bprovides details of the characteristics of our final synthetic panel dataset.4. ResultsAs outlined in section 2 we test three hypotheses in our empirical analysis: Do morehouseholds have a bank account in regions where ProCredit Bank has opened a branchcompared to locations where it has not opened a branch (volume effect). Is ProCredit Bank17