WHY VARIANCE MATTERS: A MIXED-METHODS APPROACH TO MICROCREDIT IMPACT EVALUATION

Research on microcredit overwhelmingly focuses on its average or typical impact on socio-economic development (SED), but it needs to delve deeper because impact is heterogeneous in nature. By understanding why credit affects people differently, one can better understand the various needs of and design better financial products for those living in poverty. Using a mixed methods approach, this dissertation seeks to explain the impact of microcredit on SED and what is driving the variance therein at the level of the borrower. To these ends, the dissertation utilizes a randomized controlled trial (RCT) to compare villages that received credit to similar community members who did not. This process determined the impact of microcredit loans on borrowers of the Buseesa Community Development Centre in Buyanja County, Uganda. The dissertation then employs participant observation, semi-structured interviews, and process tracing to analyze how shocks and household factors promote diverse SED outcomes. Participant observation informs more contextualized questions and decreases interviewee bias. Semi-structured interviews analyze borrowers' experience with credit and process tracing helps construct typologies of factors that influence variation in impact. Using this framework, the dissertation found that microcredit's impact is concentrated in farming inputs and outputs. It discovered that borrowers mitigate the risk of taking on loans by substituting away from the area's main commercial crop - tobacco - into expanded staple crop sales. The impact was found to be small due to the confluence of the market structure - e.g., the supply glut of low-valued staple crops - the geography, and ways in which traders manipulate prices, diminish the ability of families to benefit from access to credit. Within this impact, however, there is divergence in outcomes caused by shocks and household factors. Shocks - weather, health, and other - disrupt economic inputs and outputs. Finally, household factors -ability to negotiate the price of crops, timing of agricultural sales, having a diversified income, and loan misuse - impact investment, revenues, and livelihood strategies