, PhD Candidate, University of Kwa-Zulu Natal, Durban, South Africa
, PhD, Senior Economic lecturer and researcher, Department of Economics, School of Accounting, Economics and Finance, College of Law and Management Sturdies, University of Kwa-Zulu Natal, South Africa
This review outlines the debates and questions within the quasi-experimental analysis on whether micro-credits have created the impact since they have been designed aiming at the poor to climb out of poverty and become non-poor after having access to micro-credits. The primary purpose of the research deals with the pillar questions do micro-credits play an efficient anti-poverty strategy to eradicate poverty? Do micro-credits generate the proposed products and results by raising the living standards of micro-finance clients and do beneficiaries become less poor after they get the micro-finance service as compared with those under comparable conditions but who do not have access.
Methodization empirical causes and techniques for explaining the intrinsic challenges in untangling and identifying the impact of an intervention program is a hard task since this method analyses the plight of recipients before and after a program that may capture not merely the impact because of the unique intervention but still other impacts that should have resulted even in the program’s absence. Comparing the condition of beneficiaries after the intervention with the counterfactual situations examining what would have happened to them in the project’s absence and what kind of service or goods beneficiaries would have access to instead of the offered by the intervention requires scrutiny, time-consuming and is the greatest challenge that makes thoughtful planning, capabilities, and execution. The rational and relevance behind the resolutions for implementing the scientific question of impact analysis is a crucial tool to enable policymakers to decide whether redesigning anti-poverty intervention the program, scale it up, interrupt it or designs similar intervention schemes for other societies.
Investigation of the matter ‘Do micro-credits work as a valuable anti-poverty program for Poverty Eradication? We carry evidence from Ethiopia ‘in the paper out in the following logical sequence: we first estimated propensity scores for participation on several pre-treatment variables. We then matched clients and non-clients based on these. Next, we estimated the average treatment effect, regarding participation as a treatment, and participants as the treated group.
Methodological tools of the research methods were propensity impact analysis procedure using the 2009 dataset from four locations in northern Ethiopia. The paper presents the results of an empirical analysis of the impacts of micro-credits on poverty reduction, which showed that micro-credits have a short time significant impact on household small (productive assets), on human capital investment (expenditure on buying school material and health). Equally noteworthy, we found MFIs to have a vital effect on family spending on food, non-food items, and poverty severity.
Keywords: microcredits, poverty, impact analysis, counterfactuals, propensity score matching.
JEL Classification: G2, G20, G21, G23.
Cite as:Weldeslassie, H. A., Vermaak, C. (2019). Do Micro-Credits Work As An Effective Anti-Poverty Pro-gram For Poverty Eradication? Evidence From Ethiopia. SocioEconomic Challenges, 3(2), 31-53. http://doi.org/10.21272/sec.3(2).31-53.2019.
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