Impact of Microcredit — Mexico

Summary

The Compartamos microcredit evaluation was one of seven coordinated randomized evaluations of microcredit conducted under J-PAL auspices. Together they produced a consistent finding: microcredit access does not transform average household incomes. Effects are heterogeneous — existing entrepreneurs benefit more than new ones, and some households use credit to smooth consumption rather than invest. The finding punctured the transformative narrative around microfinance without disproving its value: credit at market rates is useful, but it is not a poverty trap escape mechanism. The Compartamos study is notable for its scale and for the coordinated multi-site design.

Research question

"Does access to microcredit at market rates increase household income and business profits?"

Methodology

Result

Mixed

No significant effect on average household income or consumption; business investment increased for existing entrepreneurs; female-run businesses showed modest profit gains

Evidence strength

Strong

Randomized trial, replicated across multiple sites or studies.

Replication status

Replicated