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

This paper reports the results of a randomized experiment designed to measure the impact of microcredit in rural areas of Morocco. The experiment was based on the assignation of a large set of villages to treatment villages where Al Amana, the largest MFI in Morocco, offered credit and control villages where no credit was offered.

The study reveals that the Al Amana program increased access to credit significantly but only a fraction of households benefited from it. The program’s main effect was to expand the scale of existing self-employment activities of households for both non-livestock agriculture and livestock activities. Findings include:

• There was little or no effect on average consumption, health, and education;
• Treatment effects were heterogeneous depending on whether the households had an existing self-employment activity at baseline;
• Households that had a pre-existing activity decreased their non-durable and overall consumption, as they saved and borrowed to expand their activities;
• Households that did not have a pre-existing activity increased food and durable expenditure. No effects on their business outcomes were observed.