The Impact of Credit on Income Poverty in Urban Mexico

This paper presents a study conducted in three urban settlements in the surroundings of the metropolitan area of Mexico City. The objective of the study was to develop an econometric approach to controlling the problems of endogeneity and self-selection, that be applied to the investigation of the effect of microcredit on income poverty in an urban context. The methodology allowed the evaluation of potential differences between group lending and individual lending technology regarding poverty impacts, including the cost of borrowing in the analysis. The paper presents the results of the study, providing an estimation of the impact of credit, employing different equivalence scales in order to measure the sensitivity of the poverty impact to the intra-household distribution of welfare.