David Roodman's Microfinance Open Book Blog

I contributed a post to CGAP's blog yesterday that summarizes the evidence to date from the randomized trials of microcredit and microsavings. Just in the last six months, enough new studies have appeared from diverse locales that we can begin to generalize. It's an important moment.

So if you're a regular follower of this blog, I encourage you to read the post. It contains things I haven't written here. The core is a couple of tables distilling the results.

*Yet Another Randomized Trial of Microcredit

The latest randomized study of the impact of microcredit has popped up on the web. Snarky blog post title notwithstanding, I very much welcome having yet another randomized test of microcredit---by my count, the fifth---because only after we test in a variety of forms and circumstances can we generalize with (cautious) confidence. We have been fortunate in the diversity so far: group and individual microcredit, rural and urban locales in India, the Philippines, Morocco, Mongolia, and now Bosnia and Herzegovina.

The cooperating lender in this newest study was EKI, one of a clutch of microlenders created and financed by outsiders after the explosion of Yugoslavia. I believe it is the first non-profit studied, an important distinction given all the debate about the role of the profit motive in microcredit. And, somewhat bizarrely, the study brings diversity of another kind to the literature: where the India and Morocco trials took place in overheating markets, this one occurred as economic crisis hit and a microcredit bubble popped. In December 2008, as the experiment began, EKI had a "portfolio at risk" (loan amounts outstanding owed by those at least 30 days behind on repayment) of just 1.63%. Within a year, the PAR shot to 10.83%.

A few years ago, Alaka Holla and Michael Kremer, the latter a leader in the randomization revolution, opened a CGD working paper with this interesting observation:

Over the past 10 to 15 years, randomized evaluations have gone from being a rarity to a standard part of the toolkit of academic development economics. We are now at a point where, at least for some issues, we can stand back and look beyond the results of a single evaluation to see whether certain common lessons emerge.

In 2009, I blogged the first two randomized trials of microcredit and the first of microsavings. Now comes what is in a sense the first randomized test of the impact of a phone-based micro-transfer service.