Impact of Microfinance Credit Access on Households’ Income and Welfare: Evidence from Ethiopia, Asmamaw Getnet Wassie, lecturer, Department of Economics, Debre Tabor University

Abstract This study examined the impact of microfinance credit access on households’ income and welfare evidence from Ethiopia. The main objective of the study is investigating the impact of microfinance credit access on households’ income and welfare. The study used cross sectional data. The study surveyed 422 households. Half of the surveyed households were credit taker but the remaining half did not take the credit. The treatment variable (D) of the study is credit access. The outcome variables of the study are income and welfare of households. The study employed both descriptive and econometric model to achieve the objective of the study. The propensity score matching was employed in the econometric part of the study to estimate the impact of the credit on outcome variable of the study. Among matching methods kernel (0.1) was employed since it satisfies the criterion of best matching between treatment unit and controlled unit. The study found that average treatment effect (ATT) on the treated group in terms of income is less than its counterpart. However, average treatment effect (ATT) on treated group in terms of welfare is greater than the average treatment effect (ATT) on controlled group.