MDGs and Microcredit: An Empirical Evaluation for Latin American Countries

This study uses for the first time household survey data from a number of Latin American countries to investigate the degree and effects of the access to credit on the income and education of poor households. With this goal in mind, multivariate regressions are run to estimate the impact of the credit to the poor on their labor income and on the probability of their children to stay at both primary and secondary school. Afterwards, based on these results, alternative credit policies are simulated. Much in line with the available microcredit evidence, the study provides mixed results: while no negative effects are identified, positive and significant loadings are found in several, but not all cases. The simulation exercises support the claim that microcredit might be a relatively powerful but still limited tool for meeting the MDGs.