Proceedings of Annual Paris Economics, Finance and Business Conference
7 - 8 April 2016, Espace Vocation Haussmann, Paris, France
ISBN: 978-1-925488-04-3
Microfinance and Entrepreneurial Activity: Evidence from a
Regression Discontinuity Design in Panama
Diallo Nènèoumou and Goyette Jonathan
In this paper, we conduct an impact analysis of microfinance on entrepreneurial activity
using a new data-set collected among 740 entrepreneurs located all over Panama in
July 2014. Our focus is on a new type of microfinance institution (MFI) which grants
loans to enterprises falling in the financial missing middle, i.e., enterprises which are too
big for traditional microfinance but not big enough for commercial banks. We collected
an unbalanced panel of data on enterprise's business and credit history. Overall, our
sample comprises 255 entrepreneurs with an outstanding loan for their activity and 485
entrepreneurs with no access to financial services. Using our partner MFI's rules of
credit attribution, we build a regression discontinuity design to evaluate the effect of
loan's obtainment on the activity of financed enterprises. Our results show a very limited
positive impact of access to credit on firm's revenues despite a significant impact on
investment in equipment and immobilizations. The magnitude of the positive effect is
higher on micro-enterprises (between 1 and 10 employees) while auto-enterprises (no
employee other than firm’s owner) are negatively impacted by microfinance as is usually
documented in the literature. We emphasize that the cost of credit is one of the major
determinants of the limited impact of microfinance on entrepreneurial activity.
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Ms. Diallo NènèOumou, PhD Candidate in Development Economics, Department of Economics, Université
de Sherbrooke, nene.oumou.diallo@usherbrooke.ca
Prof. Goyette Jonathan, Associate Professor, Department of Economics, Université de Sherbrooke,
jonathan.goyette@usherbrooke.ca