Lecture 8: Microfinance Impacts

Question 1

Positives

Answer 1

Goldberg (2005) found that most early impact evaluations reported a positive impact on poverty and income.

• Microfinance participation can affect households in many ways. * Accordingly, a range of social and economic outcomes beyond household income and consumption can be analysed as well. * This include business profits, nutrition, schooling, fertility, contraception, risk, asset holdings and so on. *

Question 2

Concerns

Answer 2

Most of these evaluations were undertaken by MFIs, microfinance advocacy groups, or international development agencies promoting and funding microfinance.

Naturally, this raised concerns about potential bias, especially underresearch on the downsides.

Many of these independent studies [e.g., Morduch (1998) and Coleman (1999)] * Questioned the rigour and validity of earlier evaluations, and * Highlighted data and methodological problems.

Question 3

Nuance

Answer 3

If we see that richer households have larger loans, we have to ask whether * The loans made the households richer, or * Do richer households simply have easier access to credit, or * Both.

• Microfinance can push fertility rates downward by putting women in employment
• But other points are important too: * Having more children at home can be helpful to compensate for extra work taken by parents