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7 th Annual MicroEnterprise Conference Provo, UT March 12, 2004

7 th Annual MicroEnterprise Conference Provo, UT March 12, 2004. The Impact of Microfinance on Economic Wellbeing: Contributions from Azerbaijan. Kris Johnson. Outline. Methodology Results Implications Questions. Central Hypothesis.

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7 th Annual MicroEnterprise Conference Provo, UT March 12, 2004

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  1. 7th Annual MicroEnterprise Conference Provo, UT March 12, 2004 The Impact of Microfinance on Economic Wellbeing: Contributions from Azerbaijan Kris Johnson

  2. Outline • Methodology • Results • Implications • Questions

  3. Central Hypothesis The more credit cycles a client completes, the better his/her household’s economic wellbeing.

  4. In Azerbaijan… • Clients are 46% male. • Overwhelmingly urban poor. • Village banks are loose affiliations. • Difficult for clients to give up time. • 97% literacy rate allows for a written survey.

  5. The Instrument (English)

  6. Sampling Distribution 69.5% 22.3% 8.2%

  7. Methodology • 2 banks per credit officer randomly selected. • Members of selected banks formally invited to event in prestigious locale. • Credit officers incented to have high turnout (resulted in roughly 85%). • Instruction and explanation given. • Each survey triple-checked for completeness and plausibility. • Raffle prizes given after all surveys pass inspection.

  8. Positive Externalities • Clients honored to be gathered in such a prominent location. • Good PR within circles of influence. • Clients received instruction and practice on general accounting. • Local staff actually enjoyed doing it.

  9. Econometric model DPCI = f (Time, Client Type, Age, Gender, Education, Assets, Social Capital) Y1 = f (T2, C, O, G, E, A, S)

  10. Initial OLS Regression

  11. Data Plots

  12. 3 Stage SS (log) • No significant correlations found between measures of household economic wellbeing and time in the microfinance program. • Interaction terms of time and age, and time and client type are significantly correlated with economic wellbeing.

  13. The Crossroads • Correlated interaction terms suggest that time spent by female clients does increase DPCI. • A cross-sectional snapshot will never allow us to account for differences between individuals and their response to time spent in the program. (Ex.)

  14. Implications • For the NIS, we have a methodology and an instrument that will allow us to collect valid panel data at very low cost. • Panel data allows us to track individual clients through their microcredit history and precisely measure impact. • Time series data empower us with information for essentially all “proving” and “improving” audiences.

  15. Questions?

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