ps - Microcredit - What's it good for?

I am excited with the sheer fact that results from first (to my knowledge) impact evaluation of micro-credit program of an MFI and one of the first few CMF projects are out.
While my colleague, Michael beat me to write post on the paper first, I would stress on few other important aspects and findings from the paper. The PSD blog and Michael's post accurately present the findings of the paper.

To me the interesting aspect was the predictions that author's model had. The baseline survey showed that 30% of spandana loans were used for starting a new business, 22% for adding stock to existing business, 30% to repay an existing loan and 15% to buy durable for household and 15% to smoothen consumption. This was important as it led to design a model of occupational choice (and here comes my favorite entrepreneurship). The model enviasge three kinds of households, one that is an entrepreneur, one that has entrepreneurial characteriscs and the one that doesn't, paper calls it propensity to start new business and no/low propensity to start a new business. The paper assume two scenarios - with MFI and without MFI. The predictions were -
1. household that have high propensity to start a business will pay the fixed costs to start the business. This means, given the loan this house will start a business activity. Results - consumption falls, investment increases - likely enterpreneurs
2. household with low propensity to start a business, if borrow would tend to increase consumption - not likely to become enterepreneurs
3. The third category, ones which already have business, borrow to increase business thus profits increase and so do consumption.

Thus, these three groups of households, will have different loan usages. The results in the paper are also summarized for the above three groups separately. That makes the paper an even more interesting read.

I know the big question now is, let us see what are charactersitics of people in first category. I list below characterics as described in the paper. However, I do feel this is such an important issue that even authors would like to explore more on this. The present characteristics doesn't capture a wholesome picture -
1. Literacy of women in family
2. presence of woman who doesnot work for a wage
3. number of prime aged woman
(ceratinly these women are available to start a new activity. cool)
4. Land ownership

All the four above positively predict the likelihood of a household starting a new business.
Since we already have posts on the analysis of results (like the one below this post), I would not present them here. However, to the issue of finding impact on health, education etc, I would say during these three years of study (2005 to 2008), there has been Government's constant foucs on education and health, especially with SSA and NRHM and various other schemes. And we can not discount the fact that Hyderabad is cosmo city now, I can safely assume hospitals and private schools have come up in areas surrounding the research slums. That ceratinly has huge impact on both treatment and control groups. And, I do agree that 18 months of intervention is a lesser to time to see changes in education and health.
If you do not feel like reading other posts and read the paper right away, download it here.