Microfinance Impact Evaluation: Going Down Market

The author reviews the impact assessment debates currently circulating in the microfinance sector and emerging agendas. She states that a great deal of attention has been given to developing middle range approaches to impact assessment that are credible, cost effective and useful.

The paper specifically looks at some of the more innovative approaches to lower cost impact assessments and posits that existing microfinance impact assessments - which may be donor and or practitioner driven - cluster around two poles:

• A large number of small scale impact assessments that use less sound methods. The designs often lack control/comparison groups and a time perspective. They employ either quantitative and qualitative instruments or take a mixed method approach;
• A limited number of large scale, methodologically rigorous, quantitative impact assessments which use sophisticated econometric analyses. Says donors and practitioners find that large scale assessments are too expensive and that a middle range approach is starting to emerge following the push within the sector is to lower the cost of impact assessment.

The paper also considers very briefly a work currently in progress, a commissioned paper for the WDR 2001 on the impact of microfinance on poverty alleviation.

The paper concludes that:

• There has been a movement towards developing lower cost, credible and useful approaches to impact assessment;
• In evolving lower cost impact assessment methods, the experience of the WDR background study suggests the value of building on previous impact work and starting with a simple conceptual framework, a small set of hypotheses, and well defined contextually meaningful variables;
• The WDR study also suggests the invaluable role of methods that emphasize client perspectives on impact and the proactive involvement of clients in the assessment process;
• Advocating for lower cost approaches puts the onus on evaluators to develop a reliable set of instruments that can measure impact more cost effectively and generate credible results.