This is one of those it-could-only-happen-today stories. The first post on this blog that wasn't devoted to the business of explaining the blog and writing the book was about Priscilla Wakefield, forgotten pioneer of financial services for the poor.
CGD Policy Blogs
The biggest controversy to hit microfinance since the Compartamos IPO erupted this week as easygoing, bookish economist types at two East Coast microfinance research institutions dueled over the longstanding empirical question of whether the glass is half full or half empty. CGAP researchers, citing industry-consensus best-practice guidelines, accentuated the positive in observing that about 2.5 billion adults worldwide have accounts with formal banking institutions (about 2.5 billion do not). Academic researchers at the NYU-based Financial Access Initiative adopted a more skeptical stance, pointing out that Half the World is Unbanked.
OK, so I won't quit my day job for nightclub comedy.
Two new studies are indeed out tallying how many people have credit or savings accounts with commercial banks, savings banks, post office savings banks, cooperatives, government development banks, and microfinance institutions. The FAI report is short and sweet and draws on data from Patrick Honahan, who is now governor of Ireland's central bank. In contrast, the CGAP report harvests new information collected by surveying financial regulators in 139 countries.
A recent op-ed in the Boston Globe argues that microlending "doesn't actually do much to fight poverty" and that it may be time to "think macro rather than micro." Maybe the hype surrounding microcredit as a panacea for everything from poverty to discrimination is undeserved. But debunking the whole bottom-up, micro approach on the basis of two unpublished papers is not just premature, but dangerous. Macro, trickle-down development policies have rather effectively kept billions of people poor for decades.
Just over three weeks have passed since I first blogged on Kiva.
When I reviewed Dean Karlan and Jonathan Zinman's randomized study of the impacts of microcredit in Manila, I noted that the people in the study had household incomes averaging $15,000 and more education than the average American. Turns out that income figure is wrong.