Jun 25, 2011

Study on Microlending in Western Guatemala

Programs that make credit available to small-scale entrepreneurs in developing countries have become an increasingly widespread tool for stimulating economic growth among the poor. This study tracks the progress of 239 participants over five years in a microcredit program in western Guatemala, relying on a survey of borrowers taken in 1994 and a re-survey of these borrowers in 1999. Important results from the study show that while rapid and significant increases in hired labor were realized by enterprises in the sample shortly after initial access to credit, this growth in employment generation quickly encountered diminishing returns, and in some cases became negative. Other results from the study highlight gender differences in response to credit access, with female entrepreneurs displaying greater enterprise stability, and greater propensity to use profits for household consumption rather than enterprise re-investment. Source. (Thanks: Luis Noel Alfaro). 
Although the study is not very recent, it takes into account data over a long period of time. Update: 
Interestingly, although employment declined over the study period, sales revenue continued to increase at an annual rate of several points greater than the rate of inflation. Sales revenue for borrowers who remained with the credit program increased 97.1% over the five-year period (in current levels of currency), while revenue of borrowers who left the program increased 76.1% . Both of these figures exceeded the increase in the Guatemalan inflation, which according to the Bank of Guatemala increased 45.5% during 1994-99. 

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