Working Paper 199 - Microcredit for the Development of the Bottom of the Pyramid Segment: Impact of Access to Financial Services on Microcredit Clients, Institutions and Urban Sustainability

The focus of microcredit for the bottomof the pyramid segment in urban areas isincreasingly becoming an area of focus asdevelopment policy-makers worktowards improving the lifestyles of urbanpoor. Previous research has had a keenfocus on the impacts of financial servicesto business outcomes,leaving behindother equally vital aspects ofdevelopment. In addition, very little ofthis research has focused on socio-economic and sustainability outcomes inurban areas. Using randomizedcontrolled trials, this paper measures theimpacts of microcredit to selected groupsof people in Kibera slum in Nairobi city,using a combination of double differenceand propensity score matchingtechniques to evaluate the impacts ofthese financial services on businesses,households, microfinance institutionsand urban sustainability outcomes.Whilethe paper finds little evidence on urbansustainability outcomes,there is asignificant,althoughsmall,improvementon business and households outcomes.