Is microfinance a good bet for a donor? We feel the answer is complicated, and that the many extreme exaggerations of microfinance’s impact get in the way of making an informed decision. This post summarizes the differences between the stories you’ve probably heard and the reality according to available evidence. Myth #1: the way microfinance…
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All Problems with microfinance Posts
Kiva repayment data
GiveWell Board member Tim Ogden asks, is Kiva reporting phantom payments? It’s hard to say for sure, but it seems that the answers is either (a) yes, they are or (b) no, but borrowers listed on Kiva’s website are not representative of the average borrowers visiting that MFI. The table below shows default rates for…
Conversation with David Roodman about microfinance
David Roodman is a research fellow at the Center for Global Development and author of David Roodman’s Microfinance Open Book Blog, where he his sharing his notes on (and content of) a book on microfinance. We have consistently found his discussions to be evenhanded, thorough, and clear, especially in terms of what should and shouldn’t…
What does the repayment rate really tell you about the impact of microfinance?
We wrote last week that the direct evidence of microfinance’s impact is less than overwhelming. However, many believe that direct evidence is not needed – that as long as microfinance institutions demonstrate high “repayment rates,” they can be assumed to be improving lives. The logic goes that if a person is able to repay their…
Financial Times on microfinance (and the need for better info about it)
PDF here (via Innovators for Poverty Action, whose research is featured). After discussing the Karlan/Zinman study showing benefits for loans (which we summarize here), it continues: Karlan is the first to warn against extrapolating too much from a single experiment. “This is the last thing in the world that I would use to develop policy,”…