ENSAYO EN CARGA

Behavioural and participatory learning and action approaches to impact assessment by their nature require involvement and cooperation of multiple parties to be successful. Besides the complex procedures involved in these approaches, it is expected that any study adopting either approach has to be longitudinal in its orientation. Adopting a longitudinal approach is arguably inappropriate for this study for a number of reasons.

Firstly, a longitudinal approach is impractical due to time and resource constraints, in that it would require a significant time lag between the initial and subsequent

measurement of treatment effects. Secondly, a longitudinal design by its nature

demands a before-after experimental setting, which is likely to introduce several validity threats (e.g. testing, instrumentation, maturation, and mortality) to the study. Thirdly, involvement of multiple parties (as is the case for behavioural and participatory learning

99 and action designs), although rich in ideas, runs the risk of breeding conflicts of interest besides breaching the bounds of anonymity, a key requirement for University Human Ethics Research Committee approval. Lastly, the accuracy of data gathered through structured interviews (as is the case in this study) depends largely on trust between the researcher and participants. While it could be straightforward to secure trust for the initial interview with a participant, this may prove difficult with subsequent interviews, especially where multiple parties are involved. Subsequent interview sessions have the potential to raise suspicion on the part of the participants as to any vested interests of the researcher, which is likely to confound study results. This is so because it would be obvious to the participants that anonymity does not exist, more of the participants‟ time would be requested, plus there may be heightened fear that longitudinal information may be followed up by authorities (e.g. tax, occupational health and safety, and labour rights). In light of these reasons, the cross-sectional approach adopted by this study is the most appropriate.

As seen in the previous section, quasi-experimental design has been commonly preferred when assessing the impact of microfinance (see Morduch, 1999, Khalily, 2004). Compared to the other two approaches, behavioural and participatory learning and action, the quasi-experimental design is the most economical yet effective in addressing the primary objective of this study. With the random selection of and

subsequent placement of participants to the respective categories on account of their use or otherwise of microcredit and/or BDS, the design enables comparison of MSEs‟ performance across the four participant categories.

As noted above (in section 4.2.2), impact assessment studies in microfinance face three key limitations especially where an experimental design is used; namely selection bias, misspecification of underlying causal relationships and fungibility of credit. First to minimise the effect of selection bias as well as other relevant threats to internal validity [e.g. history, maturation, testing, and instrumentation (Cooper and Schindler, 2006)], participant MSE owner-managers are selected at random with haphazard sampling to maximise the possibility of equivalence of all four required categories. It is only after this random approach to potential participants and their agreement to participate that effort is devoted to place participant MSE owner-managers to the relevant participant category. In addition, as explained later in this chapter, all participants in the MSE owner-manager interviews are owner-managers of MSEs that have no more than ten

100 employees. In this regard therefore all participants‟ businesses are similar in size.

Although there may be slight variation in size and/or nature of economic activity, these variations can reasonably be expected to be randomly distributed across all participant groups, irrespective of the use or non-use of either microcredit or BDS. In this way the study design effectively minimises the effect of most of the threats to internal validity including selection bias.

Second, the potential for misspecification of the direction of the causal relationship (i.e. use of both BDS and microcredit leads to improved MSE performance) is

acknowledged. It is plausible that owner-managers of MSEs that are doing well are likely to seek BDS and credit because they can better afford to and in order to further improve their fortunes. It is important to note that with a highly equivalent control group, the reverse direction of influence is not a major problem because the

phenomenon (if present) is likely to occur randomly in the population. Notwithstanding, in this study the emphasis is not on „proving‟ impact, which cannot be accomplished other than in highly controlled experimental conditions. Rather it is in testing for a positive association between use of both BDS and microcredit, and performance of the participant owner managers‟ enterprises.

Third while fungibility of credit is acknowledged, its presence may not necessarily confound the relationship under investigation in this study. This is so because while most of the other impact assessment studies focus on a particular program or

institution(s) (e.g. Zohir and Martin, 2004), this study does not limit itself in such a way. The emphasis here is on impact of the use of BDS and microcredit on MSE performance using data from users of multiple providers of either. This industry-wide approach is consistent with the methodology adopted by Hartarska and Nadolnyak, (2008), who examined the impact of microfinance in Bosnia and Herzegovina. Further, in the interview protocol, attempts are made to not only capture information about multiple sources of credit but also to specify the motive for borrowing (see Annex 2). This information is then used to control for fungibility of credit in the multivariate tests of hypotheses reported in later chapters of this study. Of course use of such control variables is dependent on honest answers being received to the interview questions, but this is true of any such research. However the assured and unambiguous anonymity offered to participants (no names were requested) and the fact that the author is

101 In summary with random selection of completely anonymous participants, classification of participants into the respective cells until the targeted number is reached for each, the creation of a control group, coupled with the control for fungibility of credit in

multivariate testing, the design of this study keeps the effects of the above limitations at a minimum. In so doing the design not only helps to elicit the participant MSE owner- managers‟ perceptions of the impact of the use of BDS and/or microcredit, but also is likely to provide evidence of the contribution of BDS and microcredit to MSE

performance, jointly and singly.