Microcredit and microsavings for small enterprises in Pakistan

Project overview

Project lead: Simon Quinn, University of Oxford

Start date: 1 September 2014

End date: 31 August 2017

Research Council project page

Recent research on microfinance suggests that savings products may be more useful for poor communities than loan products. Motivated by this research, the project aimed to address two main questions: 1) How do ROSCA-like (Rotating Savings and Credit Associations) products compare to standard loan contracts for microenterprises? 2) Can banks overcome contract enforcement problems in offering ROSCA-like financial products?

With a focus on Pakistan, the research used Randomised Controlled Trials on assigned microenterprises, using a ‘cluster-randomised’ design, treating in some locations but not in others. In treated locations, firms will be assigned to different positions in a rotating credit structure and interest rates will be varied. A baseline and three follow-up surveys of the targeted microenterprises were conducted at three-month intervals in control and treated locations, to form a four-wave panel. High-frequency data using short phone surveys was collected and was augmented with data generated by the bank internally.