The second-generation effects of microcredit in western Guatemala
Most microfinance institutions have assumed that positive second-generation effects follow involvement in microcredit, but the nature of these effects has been unclear since few scholars have directly focused their attention on them. To address this gap in the literature I conducted exploratory survey research in Western Guatemala in January 2011. I returned with 97 interviews conducted with 68 Guatemalans who had received a microloan at some point in their lives, and 29 who had never received a formal loan. In the sample of their 306 children, the parents of 94 had never received a loan, while the parents of 212 had received a loan at some point. I investigated eight hypotheses using quantitative analysis of these data. Preliminary results show that involvement in microcredit leads to first-generation increases in economic well-being and contact with the formal economy, but also show that the second-generation effects are quite mixed. The effects of microcredit on children depend on the gender of the loan-receiving parent, and being a female recipient negatively affects the second generation. When borrowers are male, positive second-generation effects of microcredit can apparently be harnessed. Involvement of a male parent in microcredit leads to higher levels of child education, lowers child propensity to serious illness, and lowers the birth rate of the male borrower's children. All of these results flip for female borrowers; receiving loans increases child birth rate, increases illness propensity and decreases child education level. The only finding that does not depend on parent gender concerns child career path. The children of loan recipients appear to be more likely to take high-skill jobs in the formal economy, an effect that is stronger when the parent has received business loans in particular. At present microcredit organizations actively encourage female participation, and far more women than men take part in microcredit around the world. More study on the second-generation effects of microcredit must be conducted so that policy makers can make informed choices based on the long-term consequences of involvement in microcredit. ^
Economics, Commerce-Business|Political Science, General|Sociology, Individual and Family Studies
Haught, Jordyn Elizabeth, "The second-generation effects of microcredit in western Guatemala" (2011). ETD Collection for University of Texas, El Paso. AAI1494311.