Impact of Microcredits on non-agricultural family production units in Madagascar

r4d Working Paper 2017/03 by Ida Rajaonera and Faly Rakotomanana

ABSTRACT: This study analyzes the impact of microcredit on non-agricultural family production units in Madagascar. The methodology used consists of combining the Propensity Score Matching and Econometric Analysis. In order to avoid the bias inherent to unobserved characteristics and the over or under-estimation of the impact, the treatment group includes the “old” and former members of Microfinance Institution (MFI) and the control group is composed of “new entrants” in MFIs. Almost of observable characteristics used in the analysis concern the situation before joining MFIs. Overall, the results of the analyzes conclude that microcredit has positive impact on family activities in Madagascar. The results showed that microcredit had a positive and significant impact on the turnover and operating budget of the production units. On the other hand, the increases in the level of production, value added and gross operating surplus are not significant. At factors of production level, positive and significant impacts were observed both on the volume of work and on the productivity of labor. On the other hand, there is no significant impact on capital.