Evaluation
Despite the initial promise of microcredit, randomized evaluations have found at best modest effects of microloans on poverty. Digitized payments from government cash transfer programs provide a unique opportunity to offer microcredit while addressing some of its shortcomings, potentially reducing interest rates, default risk, and repayment issues. Researchers are partnering with IPA, Banco BDH León, Banco ADOPEM, and Progresando con Solidaridad (or ProSoli, the Dominican Republic’s government-to-person transfer program), to test whether loans with automatic repayment through ProSoli lead to more productive investments and higher profits and income, leading to higher consumption, wellbeing, and graduation from the transfer program.