Impact of Microcredit on Poverty: Evidence from Ghana

Abstract

Microcredit is a speci c means of ghting poverty in developing countries. Given the con- trasts in its impact on poverty raised in the literature, evaluations with more rigorous methods are needed. This paper assesses access to microcredit impact on poverty through data from Ghana collected in 2004. The propensity scores matching method concludes that access to microfnance has a positive impact on household relative poverty index in the whole sample. Otherwise, this impact di ers by place of residence. Indeed, while microcredit impacts pos- itively poverty index in urban area, it has no impact in rural area. The quantile regression method has also been used to evaluate microcredit access on poverty distribution. The results show microcredit increase second and third quartile meaning microcredit is more bene cial for the richest household than the poorest. This result corroborates the schism hypothesis of microfnance denounced in the literature.

Keywords: Microcredit, Poverty, Microfnance, Ghana, Impact evaluation, Quan- tile regression