Estimating the Impact of Microcredit on Those Who Take it Up: Evidence from a Randomized Experiment in Morocco

This paper reports the results from a randomized evaluation of a microcredit program introduced in rural areas of Morocco starting in 2006 by Al Amana, the country’s largest MFI. The paper finds that among households identified as more likely to borrow, microcredit access led to a significant rise in investment in assets used for self-employment activities which resulted in increased household profit. This increase in profit was offset by a reduction in income from causal labor, so overall there was no gain in measured income or consumption. The paper notes that among those who chose to borrow, microcredit had large and heterogeneous impacts on assets and profits but a smaller impact on consumption. It rejects an increase in consumption of more than 10% among borrowers, two years after initial rollout. The paper covers the following sections in detail:

• Scope of the study;
• Al Amana’s rural credit program;
• Experimental design and data collection;
• Discussion on the results with a focus on impact of credit access and borrowing on income levels, labor allocation, consumption, education, and female empowerment;
• Externalities and instrument variable estimates including robustness checks.