The Impact of Microfinance on Pro-Social Behaviors: Experimental Evidence of Public Goods Contributions in Uganda

Date: 2016-06
By: Bryan McCannon (West Virginia University, Department of Economics)
Zachary Rodriguez (Saint Bonaventure University, School of Business)
We ask whether access to microfinance loans by the poor has a spillover effect on their pro†social behaviors. An experimental field study in southern, rural Uganda is conducted using free riding in public goods contributions as an assessment. We document higher levels of contributions by those who have previously received a microloan. This effect cannot be explained by changes in social norms, income effects, or sample selection bias. The results suggest that exposure to microfinance promotes social preferences.
Keywords: experiment, field study, free riding, microfinance, public goods, social norm, social preference, Uganda