The Impact of Microfinance Programs: A Review of Data and Methodological Dilemma

Abstract

How robust is the evidence that microcredit works? Theory on microfinance initiatives has moved far ahead of evidence, and success stories remain unsubstantiated. Lack of convergence in findings together with the contexts in which impact studies have been conducted, render the interpretation and generalization of findings intricate. Consequently, thirty years into the growth of microfinance industry there is scant evidence that microfinance improves the lives of clients in measurable ways. This paper reviews methodological and data constraints in microfinance impact assessments. The study builds on earlier work and considers recent research on microfinance initiatives in order to isolate some emerging contestable issues.

JEL classification: G21;C52;C81

Keywords: Microfinance; Impact; Methodologies; Evaluation; Data

DOI: 10.7176/JESD/11-22-09

Publication date: November 30^th 2020