Loan take-up and use: Around 1.5 years after Spandana extended credit offers, about 27 percent of eligible households had taken up loans from Spandana or another MFI, compared to 18.3 percent in comparison areas.
Business activity: Access to credit increased small business investment, but only increased the profits of the most profitable pre-existing businesses. After 1.5 years, treatment households were no more likely to own a business or start new businesses, but they did invest more in existing businesses. Households in treatment neighborhoods invested in more durable goods for their businesses in the first 1.5 years. However, a second endline survey conducted over three years after the initial microcredit offer showed no difference in business investment between the treatment and comparison groups. After three years, business asset levels were around 25 percent higher for treatment households. There is some evidence that business profits increased for businesses above the 95th percentile of profitability. To the extent that microcredit helped businesses, it may have helped the most profitable businesses the most.
Household finances: Though microcredit access increased investment, it did not lead to a significant increase in income. There were no significant differences in total household expenditures (a proxy for material well-being) between treatment and comparison groups after 1.5 or three years. However, expenditure patterns did differ between the two groups. In the first 1.5 years after gaining access to microcredit, treatment households bought more durable goods for their homes and businesses (e.g. they invested) and reduced spending on self-identified temptation goods (tobacco, eating out, etc.) and festivals.
Education and female empowerment: Researchers found little evidence to suggest that microcredit empowered women or improved investment in children’s education in this context. Women in treatment areas were more likely to manage more self-employment activities than those in comparison areas, but they were no more likely to make decisions about household spending, investment, savings, or education. In both follow-up surveys, there was no change in the probability that children or teenagers were enrolled in school, though enrollment for both boys and girls was already high at over 90 percent in the comparison group. There was also no change in the number of hours worked by girls or boys aged 5 to 15, although teenage girls did work fewer hours per week after 1.5 years.