Prior to the experimental work reviewed here, researchers had very diverse opinions on the likely returns to capital in microenterprises. Some believed that such enterprises faced severe credit constraints, and so the returns were likely high. Others viewed the entrepreneurs as driven to self-employment by necessity rather than choice, and hence as having limited ability to scale up or to realise high returns from capital injections. The experiments paint a nuanced picture that can be summarised as follows:
- On average, returns to capital injections are higher than typical lending rates of micro lenders.
- There is significant heterogeneity in these returns, with returns to male-owned enterprises, at least in some contexts, higher than those of female-owned enterprises. But there is also idiosyncratic heterogeneity that the communities of entrepreneurs understand well.
- There is scope for risk-sharing capital contracts, if feasible designs can be identified.
What we have learned, and what we now realise that we do not understand, provide the motivation for further work on the topic.
