Impact Evaluation of Hand-in-Hand Self-Help Group Programme
Principal Researchers: Annie Duflo (IPA), Santosh Kumar (University of Houston), Dean Karlan (Yale), Mir Salim
Partner Organization: Hand in Hand, Tamil Nadu

Self-help Groups (SHGs) are homegrown Indian model of microfinance that has rapidly expanded in recent years. The State of the Sector Report in 2008 reveals that there are 3.47 million number of SHGs covering 45.2 number of households in India, with a growth rate of 7.18% in 2007-08. Several studies have advocated that SHGs should be a tool for alleviation of poverty and women empowerment. However, there has been little or no evidence to prove that formation of SHGs has led to poverty alleviation. Studies conducted so far in India have focused more on the SHG group dynamics, savings, linkages with the bank and the social empowerment rather than rigorous impact assessment.  

A secondary issue in the sector concerns training and support provided to micro-entrepreneurs. Most advocates argue that training along with access to credit can benefit the poor. However, there is a growing debate on the importance of training for improving productive use of credit among the poor.  Dr. Mohammed Yunus has questionered whether poor households have the skills they need to make the most of available credit; others believe there are teachable skills that could leverage borrowers’ access to credit into more productive businesses and more secure households. Again, there are a dearth of studies that rigorously examine the impact of business training.    

The Hand-in-Hand Impact Assessment Study has been formulated to answer these questions. This study is being implemented in collaboration with Hand in Hand (an NGO-MFI) in three districts of Tamil Nadu. The primary objective is to evaluate the socio-economic impact (such as income, expenditure, savings, etc) of the micro-credit Self-Help Group program of Hand in Hand, which is provided to clients along with other supporting services such as the Entrepreneurial Development Training (EDT) for setting up of enterprises, literacy training etc. In order to avoid issues of non-comparability among the MFI clients and non-clients, this study chooses to use randomized control trials to assess the impact of SHGs and EDT programme. This helps isolate the effects of micro finance coupled with EDT, reflected by changes in the use of financial products, asset ownership, decision making power etc. .  

Currently, CMF has finished two pilots in two districts of Tamil Nadu where Hand-in-Hand is currently operating. The baseline survey is scheduled to start in April or May 2010.

CMF Research Associate: Veena Jayaram, Thomaz Alvares de Azevedo e Almeida

CMF Programme Head: Deeptha Umapathy