Archive for: microfinance impact

The Other Side of the Interest Rate Argument

by Casey Wilson - Guest blogger for microfinance.cgap.org: Thursday, June 17, 2010

After reading Neil MacFarquhar’s article “Banks Making Big Profits from Tiny Loans”, I was shocked to hear about how exorbitant are the interest rates that some microfinance institutions (MFIs) around the world are charging their borrowers and saddened to hear that the focus of these institutions has clearly drifted from helping the poor.  However, in my experience, founding Wokai, a China-focused microfinance organization (www.wokai.org), I have to point out that high interest rates is not a universal problem.  In fact, China is facing the opposite issue: interest rates charged by MFIs are too low.

Read the rest of this page »

A Fine Blog on the Impact Debate

by Richard Rosenberg: Wednesday, May 5, 2010

A recent blog by Chris Dunford and colleagues at Freedom from Hunger–Different Levels of “Knowing” the Impact of Microfinance–struck me as balanced and insightful.  It recognized, with a refreshing lack of defensiveness, that evidence from randomized controlled trials is essential (not just useful) for testing claims about the effects of microfinance.  At the same time it insisted—correctly, I think—that practitioner experience during years of work with poor clients constitutes real knowledge.

Maybe the question is “knowledge for whom?” For instance, my own 27 years of unsystematic experience with a variety of development funding agencies have left me with some conclusions regarding them that I feel very confident about—confident enough to base career decisions on those conclusions. But it’s quite another matter to communicate that knowledge publicly in a way that justifies others who haven’t shared my experience to be equally confident about those conclusions, or to accept my conclusions rather than differing conclusions that someone else might be offering. That’s why we need social sciences.

On another subject, Chris recognizes that in the real world individual stories raise more funding than statistics do. So none of us should complain if fund-raising brochures are long on anecdotes and short on regression analyses.  At the same time, I think Chris would agree that stories which may be appropriate in a fund-raising brochure are much more problematic when they are trotted out as evidence in a serious discussion about how we can know whether microfinance is effective or not.

MFI networks issue manifesto in response to recent randomized impact studies

by Richard Rosenberg: Wednesday, April 14, 2010

Six practitioner networks published a statement last week in an effort to counteract negative publicity arising from recent randomized trials of the impact of microcredit.  These studies failed to find evidence that microcredit was producing gains in household income or consumption, at least over the short term.

Much of the networks’ statement was reasonable, but I thought it failed to hold water on a few key points, which have been ably analyzed in posts by David Roodman of CGD  and Sushmita Meka of IFMR.

Read the rest of this page »