MDRC in the News

How Microfinance Measures Up in New Jersey

Bloomberg CityLab


 A three-year study of a microlending program for low-income female entrepreneurs in New Jersey found that participants increased savings, earnings and credit scores, according to a report Friday.

The final findings from the first randomized control trial of a U.S. microfinance program, which was overseen by Grameen America, come as policymakers consider a range of poverty-reduction initiatives, such as guaranteed income programs and other forms of direct cash assistance…..

…..The new study, funded by the Robin Hood Foundation and conducted by the nonprofit research firm MDRC, looked at 1,492 women in Union City, New Jersey, from March 2014 to March 2017. Roughly 70% of participants could apply to the Grameen America program and receive a loan ranging from $500 to $1,500. The other 30% comprising the control group did not join Grameen programs but could seek loans elsewhere. Most were Latina women born outside the U.S., and about 65% were parents to at least one child who lived with them…..

…..The researchers found that Grameen America participants increased non-retirement savings by an average of $839 compared to women in the control group. They were over 17 percentage points more likely to have a credit score. Monthly net business earnings increased an average of $127. Average monthly net income was $173 higher.

There is no silver bullet for reducing poverty, but “microloans give options. They are another tool in our anti-poverty tool box,” said Richard Hendra, director of MDRC. “For this population that we studied, they were very effective.”…..

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