Impact of Microcredit — Mexico
Compartamos Banco / MIT / Innovations for Poverty Action · Rural Mexico · 2015
Summary
The Compartamos microcredit evaluation was one of seven coordinated randomized evaluations of microcredit conducted under J-PAL auspices. Together they produced a consistent finding: microcredit access does not transform average household incomes. Effects are heterogeneous — existing entrepreneurs benefit more than new ones, and some households use credit to smooth consumption rather than invest. The finding punctured the transformative narrative around microfinance without disproving its value: credit at market rates is useful, but it is not a poverty trap escape mechanism. The Compartamos study is notable for its scale and for the coordinated multi-site design.
Research question
"Does access to microcredit at market rates increase household income and business profits?"
Methodology
Intervention
Random expansion of credit access through Compartamos group lending program to previously unserved areas
Assignment
Randomized controlled trial (geographic market expansion)
Sample size
17,046 households in 238 communities
Primary outcome
Household income; business profits; female empowerment; consumption
Effect estimate
No significant effect on average household income or consumption; business investment increased for existing entrepreneurs; female-run businesses showed modest profit gains
Decision
Finding contributed to 'tempered expectations' consensus on microcredit; shifted development finance toward complementary services
Result
Mixed
No significant effect on average household income or consumption; business investment increased for existing entrepreneurs; female-run businesses showed modest profit gains
Evidence strength
Strong
Randomized trial, replicated across multiple sites or studies.
Replication status
Replicated
Institution
Compartamos Banco / MIT / Innovations for Poverty Action
Location
Rural Mexico
Year
2015
Policy area
International Development
Mechanism
Cash transfer