Microfinance and Economic Development [book]

Robert Cull, Jonathan Morduch
2017 Policy Research Working Papers   unpublished
Microfinance is generally seen as a way to fix credit markets and unleash the productive capacities of poor people dependent on self-employment. The microfinance sector grew quickly since the 1990s, paving the way for other forms of social enterprise and social investment. But recent evidence shows only modest average impacts on customers, generating a backlash against microfinance. We reconsider the claims about microfinance, highlighting the diversity in evidence on impacts and the important
more » ... and the important (but limited) role of subsidy. We conclude by describing an evolution of thinking: from microfinance as narrowly-construed entrepreneurial finance toward microfinance as broadly-construed household finance. In this vision, microfinance yields benefits by providing liquidity for a wide range of needs rather than solely by boosting business income. Prepared for Handbook of Finance and Development (Thorsten Beck and Ross Levine, eds.) We are grateful for permission to incorporate parts of "The way statistics shaped microfinance,"
doi:10.1596/1813-9450-8252 fatcat:yqtktooov5brjaegrjd453zdbm