Experimental Design
All borrowers in the sample have been fully approved by the microfinance institution to receive loans. As part of this approval process, their applications are reviewed by the risk division and the borrowers must attend an educational session on how to create an investment plan.
Once they have completed these steps, they are randomly assigned to the treatment group (and receive the larger individual liability loan) or the control group (with the option of a smaller individual liability loan). Both groups also receive the standard join-liability loans.
Impact of the intervention is evaluated using three rounds of data collection: a baseline, an endline, and surveys with the borrowers’ customers. During phone-based interviews, borrowers self-report business outcomes, including profits and what they used the loan for. We also use administrative data from the bank on repayment and other borrowing behaviors to evaluate borrower performance.
We also use a phone-based survey to collect the opinions of loan officers and other peers on the suitability of each candidate prior to the baseline.