Case Study Report: "...Then I Learned I Could Get a Loan "

This paper assesses the impact of the Local Initiatives (Microfinance) Project II (LIP II) on the lives of the economically poor citizens of Bosnia and Herzegovina (BiH).The impact evaluation assesses whether microcredit:

• Reaches its target population;
• Improves the household welfare of borrowers;
• Promotes business development;
• Eases the post-conflict transition.

The objectives of the case studies are to:

• Identify financial management practices within the household economic portfolio;
• Determine the impact pathways by which microcredit leads to impacts on household welfare, business development and post-conflict transition;
• Understand clients' perspectives on impacts.

The paper discusses:

• The research methods used in the case studies;
• The findings on financial management, business development and household welfare;
• The clients' views on microcredit and weaknesses of microcredit programs.

The key findings of the research are:

• Clients learn about microcredit through informal networks;
• Microcredit has helped them adjust to new economic situations after the war;
• They prefer to borrow from microcredit organizations and are very loyal;
• They have many business challenges, including low prices and problems in marketing their products;
• There is a need for loan guarantors.

The paper lists the following implications of the findings:

• Pervasiveness of word-of-mouth advertising;
• Strength of client loyalty;
• Significance of client-staff relationships;
• Difficulty in satisfying guarantor requirements;
• Clients' increasing interest in alternative loan sources.