Measuring the Impact of Microfinance: Taking Another Look

This paper surveys significant microfinance assessment evaluations released or published between 2005 and 2010.

Media coverage on the impact of microfinance has painted a mixed, and often, negative picture. Findings from various microfinance impact assessments indicate that:

• Microfinance has positive impacts on poor clients’ lives;
• Formal savings accounts increase business investment and savings for women;
• Microfinance leads to an increase in profits, but only for male borrowers;
• Microfinance has no overall effects on income or poverty;
• Microcredit has no social impact;
• Microfinance services are more likely to reach wealthier borrowers;
• Women-targeted MFIs promote consumption smoothing, asset growth and occupational mobility.

It is almost impossible to answer whether microfinance works, because it operates in extremely heterogeneous situations, offering diverse products to various types of clients. The studies in this survey demonstrate that it is not easy to evaluate microfinance’s financial and social impact. Researchers and practitioners should not over-interpret the results of empirical studies. They should, instead, think of each impact assessment as contributing to a growing body of work on knowledge about microfinance in all its forms.