Tracking the Progress of 239 Microcredit Program Participants in Guatemala: 1994-1999

This study tracks progress over five years of 239 participants in a microcredit program in western Guatemala. It uses data from surveys of borrowers made in 1994 and 1999.

The study examines long-term issues and development patterns among microcredit borrowers. Small enterprises realized a burst of growth in capital accumulation, number of hired employees in the enterprise, and business revenue almost immediately upon receiving access to credit. Findings include:

• Growth tended to plateau quickly after the addition of two or three employees;
• Incremental increases in hired labor were found to be very small, and frequently negative;
• Income continued to increase, though not as rapidly as in the months directly following initial credit access;
• Enterprises operated by female entrepreneurs appeared to be more stable than those operated by men;
• Drop-out rates from the credit program were much lower among female entrepreneurs.

The study indicates that gender differences do exist in response to credit access. An important policy implication is that while access to credit may be a binding constraint to growing an enterprise, there are other constraints such as human capital and formal management skills which inhibit growth.