Impact evaluation of microfinance on income, savings, and household living standards in the Philippines using a combination of propensity score matching and difference and difference

• Main Author: Leomo, Yuri Mejia
• Format: text
• Published: Animo Repository 2017
• Subjects: Microfinance—Philippines; Cost and standard of living—Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/faculty_research/11029
• Institution: De La Salle University

Microfinance has been used as a tool to reduce unemployment and poverty despite varying assessments of its impact. There is also a dearth of evidence on how microfinance impacts non-income measures of poverty such as household living standards. Using a combination of propensity score matching and difference in difference to control for self-selection, endogeneity, and non-random program placement, this research tested the impact of microfinance on income, savings, and different measures of household living standards. This research numbers among a few that evaluates microfinance’s impact on access to electricity, access to a sanitary toilet facility, access to clean water, as well as access to decent and secure housing.This research finds that, on average, participation in microfinance increased annual household savings from 2008 to 2010. This corroborates previous findings that microfinance impacts vulnerability and not poverty per se.The research also finds that poorer participants had a significant increase in both income and savings. This shows that among poorer participants, microfinance reduces both poverty and vulnerability. Microfinance also had a positive impact on household living standards by improving the access to electricity. Furthermore, the data detected a negative impact on access to sanitary toilet facilities among poorer participant households.