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Friday, March 25, 2011

Does microfinance work?


From David Bornstein’s op-ed today:

An overview of available research by an independent economist, Kathleen Odell, can be found here (pdf). (Odell’s report was commissioned by the Grameen Foundation, a U.S.-based nonprofit that supports microfinance, but her report is considered by other researchers in the field to be well-balanced and unbiased.) Odell notes that evidence from studies using different methodologies in different settings suggests that microfinance — including both loans and savings services — is, in fact, good for microbusinesses. But she adds that the “overall effect on the incomes and poverty rates of microfinance clients is less clear, as are the effects of microfinance on measures of social well-being, such as education, health, and women’s empowerment.”

If this conclusion seems a little confusing, it’s because microfinance is not, itself, one simple thing.

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