What is the evidence of the impact of microfinance on the well-being of poor people?

Duvendack, Maren, Palmer-Jones, Richard, Copestake, James G., Hooper, Lee, Loke, Yoon and Rao, Nitya (2011) What is the evidence of the impact of microfinance on the well-being of poor people? EPPI-Centre, Social Science Research Unit, Institute of Education, University of London, London.

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The concept of microcredit was first introduced in Bangladesh by Nobel Peace Prize winner Muhammad Yunus. Professor Yunus started Grameen Bank (GB) more than 30 years ago with the aim of reducing poverty by providing small loans to the country’s rural poor (Yunus 1999). Microcredit has evolved over the years and does not only provide credit to the poor, but also now spans a myriad of other services including savings, insurance, remittances and non-financial services such as financial literacy training and skills development programmes; microcredit is now referred to as microfinance (Armendáriz de Aghion and Morduch 2005, 2010). A key feature of microfinance has been the targeting of women on the grounds that, compared to men, they perform better as clients of microfinance institutions and that their participation has more desirable development outcomes (Pitt and Khandker 1998). Despite the apparent success and popularity of microfinance, no clear evidence yet exists that microfinance programmes have positive impacts (Armendáriz de Aghion and Morduch 2005, 2010; and many others). There have been four major reviews examining impacts of microfinance (Sebstad and Chen, 1996; Gaile and Foster 1996, Goldberg 2005, Odell 2010, see also Orso 2011). These reviews concluded that, while anecdotes and other inspiring stories (such as Todd 1996) purported to show that microfinance can make a real difference in the lives of those served, rigorous quantitative evidence on the nature, magnitude and balance of microfinance impact is still scarce and inconclusive (Armendáriz de Aghion and Morduch 2005, 2010). Overall, it is widely acknowledged that no well-known study robustly shows any strong impacts of microfinance (Armendáriz de Aghion and Morduch 2005, p199-230). Because of the growth of the microfinance industry and the attention the sector has received from policy makers, donors and private investors in recent years, existing microfinance impact evaluations need to be re-investigated; the robustness of claims that microfinance successfully alleviates poverty and empowers women must be scrutinised more carefully. Hence, this review revisits the evidence of microfinance evaluations focusing on the technical challenges of conducting rigorous microfinance impact evaluations.

Item Type: Book
Faculty \ School: Faculty of Social Sciences > School of International Development
Faculty of Medicine and Health Sciences > Norwich Medical School
Faculty of Science > Tyndall Centre for Climatic Change
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Depositing User: Users 2731 not found.
Date Deposited: 15 Nov 2011 13:06
Last Modified: 19 Apr 2021 23:55
URI: https://ueaeprints.uea.ac.uk/id/eprint/35466

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