1. REAL Microcredit: Brazilian and Chilean Cases Patricio A. Aroca IDEAR – CATHOLIC UNIVERSITY OF THE NORTH, CHILE REAL – UNIVERSITY OF ILLINOIS, USA

2. Motivation and aim Current characteristics: Outreach – Who are getting the micro-credit? Practices - Are the MFI using the best practices? This work attempts to asses the direct impact of microcredit programs on the micro entrepreneurs and the economy

3. The Microcredit Market Distribution of Income Bank Clients (Graph 1: Chile) NGO Clients (Graph 2: Chile) NGO v/s Bank (Graph 3: Chile) NGO, Bank, Control Group, Total (Graph 4: Brazil) Best Practices: Lending/Saving Group

4. Bank Clients (Graph 1: Chile)

5. NGO Clients (Graph 2: Chile)

6. NGO v/s Bank (Graph 3: Chile)

7. NGO, Bank, Control Group, Total (Graph 4: Brazil)

8. Best Practices: Lending Group

9. Education

10. Methodology Impact Assessment Problem: Group Comparison (Hulme, 2000) Method: Propensity Score to characterized people (Probit) Matching Estimator ( Rosenbaum and Rubin,1983) The average treatment effect on the treated Data Own Survey to Micro-Entrepreneurs CASEN 2000, Chile PNAD 1999, Brazil

11. Results for Brazil

12. Microcredit Program Evaluation Brazil Chile Microcredit Impact Banks NGOs Bank NGO Zero 0 3 0 4 0.0% 2.0% 0.0% 13.3% Positive 45 147 51 25 97.8% 98.0% 100.0% 83.3% Negative 1 0 0 1 2.2% 0.0% 0.0% 3.3% Total 46 152 51 30 100.0%

13. Conclusion Collateral versus Lending Group Determinant of the outreach Policy: Fix the incentives in a way that lending group be a common practices Education and Training Programs are not as important as we expected The impact of the microcredit is positive, especially in Brazil. Policy: Increase the size of the microcredit industry.