Loan Take-Up and Use: Twenty-six percent of eligible households took up loans from Spandana or another MFI by the time of the endline survey. Spandana does not insist that loans be used for business purposes, however 30 percent of Spandana borrowers reported they used their loans for starting a new business, and 22 percent to buy stock for existing businesses. Additionally, 30 percent of loans were reportedly used to repay an existing loan, 15 percent to buy a durable good for household use, and 15 percent to smooth household consumption.
New Businesses and Business Profits: 5.6 percent of households in treatment areas reported operating a business which was opened in the past year, compared to 4.7 percent in comparison areas. Most existing business owners did not see a change in profits with the new competition.
Expenditure: There were no significant differences in total household expenditures between treatment and comparison groups. However, expenditure patterns were very different for different groups. Those with an existing business bought more durable goods for their home and business (i.e. they invested). Treatment households cut back sharply on temptation goods (tobacco, eating out, etc) and invested more. A switch from temptation goods to investment in the first two groups is encouraging and may lead to higher consumption in the future, though it is too early to tell.
Education, Health and Female Empowerment: No evidence was found to suggest that microcredit empowers women or improves health or educational outcomes. Women in treatment areas were no more likely to be make decisions about household spending, investment, savings, or education. Households in treatment areas spent no more on medical care and sanitation than do comparison households, and were no less likely to report a child being sick. There was no change in the probability that children or teenagers were enrolled in school or in the number of hours worked by girls or boys aged 5 to 15, although teenage girls' labor supply decreased.
1 ”Microfinance: what role in Africa’s development?” United Nations, Accessed June 23, 2014 http://www.un.org/africarenewal/magazine/august-2011/microfinance-what-r....
2 Greater Hyderabad Municipal Corporation, “Chapter V: Basic Services to the Urban Poor,” Hyderabad - City Development Plan, http://www.ghmc.gov.in/cdp/chapter%205.pdf. (Accessed September 8, 2009)