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The Impacts of Microfinance: Evidence from Joint-Liability Lending in Mongolia

Last registered on March 07, 2014
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Pre-Trial

Trial Information

General Information

Title
The Impacts of Microfinance: Evidence from Joint-Liability Lending in Mongolia
RCT ID
AEARCTR-0000303
First published
March 07, 2014, 6:44 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
Mongolia
Region
Uvs, Arkhangay, Khovsgol, Bulgan, Hentii provinces (aimags)

Primary Investigator

Name
Ralph De Haas
Affiliation
EBRD
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Other Primary Investigator(s)

PI Name
Heike Harmgart
PI Affiliation
EBRD
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PI Name
Emla Fitzsimons
PI Affiliation
Institute for Fiscal Studies
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PI Name
Britta Augsburg
PI Affiliation
Institute for Fiscal Studies
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PI Name
Orazio Attanasio
PI Affiliation
Institute for Fiscal Studies
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Additional Trial Information

Status
Completed
Start date
2008-02-01
End date
2011-11-01
Keywords
Finance & Microfinance
Additional Keywords
Poverty, joint liability lending, randomized field experiment
JEL code(s)
016, G21, D21, I32
Secondary IDs
Abstract
We present evidence from a randomized field experiment in rural Mongolia on the comparative poverty impact of group versus individual microcredit. We find a positive impact of group loans but not of individual loans on entrepreneurship and food consumption. Moreover, group borrowers are less likely to make informal transfers to families and friends while the opposite holds true for individual borrowers. This suggests that joint liability may deter borrowers from using loans for non-investment purposes with stronger impacts as a result. We find no difference in repayment rates between both types of microcredit.
External Link(s)

Registration Citation

Citation
Attanasio, Orazio et al. 2014. "The Impacts of Microfinance: Evidence from Joint-Liability Lending in Mongolia." AEA RCT Registry. March 07. https://doi.org/10.1257/rct.303-1.0
Former Citation
Attanasio, Orazio et al. 2014. "The Impacts of Microfinance: Evidence from Joint-Liability Lending in Mongolia." AEA RCT Registry. March 07. https://www.socialscienceregistry.org/trials/303/history/1207
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Experimental Details

Interventions

Intervention(s)
Joint-liability group lending (without repayment meetings) in 15 villages, individual lending in 15 villages and ten control villages.
Intervention Start Date
2008-03-15
Intervention End Date
2009-10-01

Primary Outcomes

Primary Outcomes (end points)
Loan take up, female entrepreneurship, profits, household income, consumption, asset ownership, labor supply.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The experiment took place in 40 villages across five aimags (provinces) in northern Mongolia. The experiment started in February 2008 when XacBank loan officers and representatives of the Mongolian Women's Federation (MWF) organized information sessions in all 40 villages. After about 30 women had signed up in each village and had declared their interest in receiving a loan, a detailed baseline survey was administered during the second and third week of March 2008. The total number of women interviewed was 1,148. The face-to-face interviews were conducted by a specialized survey firm hired by the research team and independent of XacBank. At the time of the baseline survey we also collected information on the main socioeconomic, demographic, and geographic characteristics of the 40 villages. Randomization took place after completion of the baseline survey so that at the time of the interview respondents did not know whether they would be offered a group loan, an individual loan, or no loan at all. Village-level randomization was performed in a central location, using a random number generator in Stata, as decentralized and public randomization was not feasible given that the villages were spread over a large geographical territory. Randomization across rather than within villages was chosen because it was administratively and politically easier to manage. We stratified at the province level. After randomization, group formation proceeded in the 15 group-lending villages, but not in the individual-lending and control villages. Group formation consisted of the development of internal procedures, the election of a group leader, and the signing of a group charter. Groups were formed by the women themselves not by XacBank. A maximum of two women per group were allowed to be from the same family. After a group had collected enough internal savings it could apply for its first XacBank loan. The treatment period during which XacBank provided loans in the group and individual-lending villages lasted 1.5 years - from March 2008 to September 2009. During this period participating women in treatment villages could apply for (repeat) loans. In October 2009 we conducted a follow-up survey to measure again the poverty status and economic activity of the participating women. At this time, we also conducted a second village-level survey to collect information on village characteristics that may have changed, such as the prices of important consumer goods. XacBank collected repayment information on all loans for the entire period March 2008-June 2011. Lastly, in October 2011, we revisited one individual-lending and two group-lending villages for structured interviews and discussions with a number of borrowers about their experience of the lending programs.
Experimental Design Details
Randomization Method
Village-level randomization was performed in a central location, using a random number generator in Stata, as decentralized and public randomization was not feasible given that the villages were spread over a large geographical territory.
Randomization Unit
Randomization across rather than within villages was chosen because it was administratively and politically easier to manage. We stratified at the province level.
Was the treatment clustered?
Yes

Experiment Characteristics

Sample size: planned number of clusters
40 villages
Sample size: planned number of observations
1,148 women
Sample size (or number of clusters) by treatment arms
Joint-liability group lending (without repayment meetings) in 15 villages, individual lending in 15 villages and ten control villages.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Technical Cooperation Committee (TC Com) EBRD
IRB Approval Date
2007-06-14
IRB Approval Number
0000
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
Yes
Intervention Completion Date
October 01, 2009, 12:00 +00:00
Data Collection Complete
Yes
Data Collection Completion Date
July 01, 2011, 12:00 +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
40 villages
Was attrition correlated with treatment status?
Yes
Final Sample Size: Total Number of Observations
1,148. Attrition correlated with treatment in the case of the individual treatment not in case of the group treatment.
Final Sample Size (or Number of Clusters) by Treatment Arms
15 group lending, 15 individual lending, 10 control
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
No
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials