Describe Qualitative analysis and Statistical analysis as used in measuring the impact of credit.

Qualitative Analysis
Micro-finance may affect household outcomes through a variety of channels:
- Micro-finance may make households wealthier, yielding an “income effect” that should push up total consumption levels and, holding all else the same, increase the demand for children, health, children’s education, and leisure. But running micro-enterprises may also take time (and make that time relatively more valuable than other activities), yielding “substitution effects” that may counterbalance the effects of increased income
- The fact that it is often women that are earning the income is not incidental. Another way that micro finance can affect household outcomes is by tipping the balance of decision making. With added income, women may gain clout within the household, using it to push for greater spending in areas of particular concern to the woman
- Micro lenders may make direct, non financial interventions that affect client outcomes. Some programs use meetings with clients to advise on family planning, and to stress the importance of schooling and good health practices, taking advantage of group meetings to hold communal discussions and training sessions (credit with education)
- Credit with education can also have impacts on household income and spending by reducing the incidence of illness and raising productivity

Statistical Analysis
Most statistical studies measure the causal impact of micro finance on borrower income.
The amount of income realized in a business can be attributed to many sources. These include:
- Entrepreneur’s age, education, and experience (these attributes are generally measurable).
- Entrepreneurial skills
- Persistence in seeking goals
- Organizational ability
- Access to valuable social networks
- Shocks such as having a flu or employee infighting
- Location of business
- Where you live
- Political stability
- Economic stability (rampant inflation, or economic booms)
Calculating the impact of micro finance requires disentangling its role from the simultaneous roles of all of the attributes. The challenge is made harder by the fact that the decision to participate in a micro finance program - and at what intensity - will likely depend on many of those same attributes. Thus, there is likely to be a high correlation between micro finance participation and, say, your age and entrepreneurial ability. Since researchers can record your age, there are simple ways of controlling for age-related issues. But since entrepreneurial ability is typically unmeasured, researchers need to be careful in making comparisons or else the impact of being a better entrepreneur could misleadingly be interpreted as an impact of micro finance access.

---

Kavungya answered the question on March 26, 2019 at 09:06