Track Record of Microfinance for the Poor

Abstract

The impact of microfinance programs on the poor is difficult to assess, although a number of studies have tried. This paper usefully summarizes the performance of the industry and identifies a number of empirical pitfalls and methodological problems. While outreach is surprisingly impressive, financial sustainability remains a major problem in many countries. Most importantly, positive benefits vary by gender, type of program and country, and some households may be so poor and lacking basic skills that it could even be a mistake to encourage them to borrow.