Microfinance studies keep rolling in
David Roodman at the Center for Global Development has published another summary of recent studies on microfinance’s efficacy. Most of the results do not support microfinance as a catch-all poverty alleviation tool, with no studies showing microfinance projects significantly increasing incomes or lowering poverty levels and the only real impact coming from other non-business focused programs. Looking at these findings, Holden at GiveWell concluded that
“[i]t seems to us that rigorous studies have not shown the impact implied by [microfinance's individual] success stories, and that the most encouraging effects have come from programs that are not centered around business expansion loans.”
However, champions of the microfinance cause should not despair. Roodman is working on a book about microfinance, applying Amartya Sen’s “development as freedom” model to the efforts of MFIs, which could offer up more holistic and positive effects of microfinance.
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