Measuring the impact of microfinance in Hyderabad, India

In a simple randomized control trial (RCT) by the Abdul Latif Jameel Poverty Action Lab (J-PAL), a large Indian microfinance institution, Spandana, identified 104 low-income neighborhoods in Hyderabad, India, which were potential locations to open a branch office.

Prior to opening the branch offices, 52 neighborhoods were randomly selected to have an office open in 2005 – this became the treatment group. The remaining 52 neighborhoods remained “control” (receiving an office in the following years). Households were then interviewed 15-18 months after the introduction of microfinance in the treatment areas.