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David Roodman's Microfinance Open Book Blog


The Economist just carried a nice piece on the new, randomized generation of microcredit impact studies. The article covers two studies in brief: the one by Abhijit Banerjee, Esther Duflo, Rachel Glennerster, and Cynthia Kinnan of group microcredit in Hyderabad and the brand new one by Dean Karlan and Jonathan Zinman of individual loans to microenterprises in Manila. See my review for a fuller summary of the first and watch this space for a review of the second soon (update: here it is).

I think the Economist correctly discerned the significance of the present moment: we are in 2009 entering a new era in the study of the impacts of microfinance.

I can't resist pointing out what looks to me like an unacknowledged debt to the paper that Jonathan Morduch and I recently released that raises doubts about older, non-randomized studies. The Economist writes:

Mohammad Yunus, the founder of Grameen Bank in Bangladesh and the father of microfinance, reckons that 5% of Grameen Bank’s clients exit poverty each year. Yet economists point out that there are surprisingly few credible estimates of the extent to which microcredit actually reduces poverty.

We write:

Mohammad Yunus, the visionary founder of the Grameen Bank, often cites the figure that “5 percent of the Grameen borrowers get out of poverty every year.”


Strikingly, 30 years into the microfinance movement we have little solid evidence that it improves the lives of clients in measurable ways.

If you want to learn more about why "some economists" doubt the old studies, you might start with this post.

Important update: I've had some nice correspondence with the Economist author, and I believe I was wrong about the "debt." It seems that some people are perfectly competent to judge the literature without my help!

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