Evidence LibrarySystematic reviewsEvidence of the impact of microfinance DfID SR
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What is the evidence of the impact of microfinance on the well-being of poor people?

What do we want to know?

What is the evidence of the impact of microfinance on the well-being of poor people?

Who wants to know?

Policy-makers, donors, academics and microfinance practitioners.

What did we find?

Most microfinance impact evaluations included here investigate group lending and credit only interventions. These do not reflect the diversity of the sector, and hence this does not allow us to reach a conclusion as to the impact of the microfinance sector as a whole; individual lending is a more recent phenomenon that has not yet been evaluated widely. Paired with doubts about the research designs and analytical methods used by the various microfinance impact evaluations, we can neither support nor deny the notion that microfinance is pro-poor and pro-women.

Our report shows that almost all impact evaluations of microfinance suffer from weak methodologies and inadequate data, thus adversely affecting the reliability of impact estimates. Nevertheless authors often draw strong policy conclusions generally supportive of microfinance. This may have lead to misconceptions about the actual effects of programmes, thereby diverting attention from conducting the search for perhaps more pro-poor interventions and more robust evaluations.

What are the implications?

It is still unclear under what circumstances, and for whom, microfinance has been and could be of real rather than imagined benefit to the poor; not surprisingly we focus our policy recommendations on the need for more and better research. The development community may be well advised to engage constructively with evaluation techniques and to understand their limitations so that more reliable evidence of impact can be provided hopefully leading to better outcomes for the poor.

How did we get these results?

By rigorously applying the systematic review guidelines as set out by the Cochrane and Campbell Collaborations. We searched eleven academic databases, and four microfinance aggregator and eight NGO or aid organisation websites; we also consulted bibliographies of reviewed books, journal articles, PhDs, and grey literature.

The EPPI-Centre reference number for this report is 1912.

This report should be cited as: Duvendack M, Palmer-Jones R, Copestake JG, Hooper L, Loke Y, Rao N (2011) What is the evidence of the impact of microfinance on the well-being of poor people? London: EPPI-Centre, Social Science Research Unit, Institute of Education, University of London.
ISBN: 978-1-907345-19-7
 

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