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David Roodman's Microfinance Open Book Blog

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Back in 2005, the Washington, DC--based Grameen Foundation commissioned Nathanael Goldberg to review the research on the impacts of microfinance. A lot has happened in the field since then, especially last year. In response, to the new studies and the attendant controversy, the Grameen Foundation commissioned, and has just released, a new review by Kathleen Odell. I applaud the Grameen Foundation for giving her such autonomy. She has done a fantastic job.

The report reviews a good set of relevant studies. With concision and clarity, yet without jargon, it explains the pros and cons of various research methods, and the limitations of them all. And it draws balanced judgments. It is a model of public communication about social science research.

All that is at least as important as her bottom line. But of course you want to know what that is, as I did. I think she gets it right:

There is evidence from a number of studies (using a variety of methodologies and from different settings) suggesting that microfinance is good for microbusinesses. Various studies showed increases in business ownership, investment, and profits. Importantly, this result holds for microsavings as well as microcredit. Microsavings in particular appears to be a promising financial instrument whose potential is only beginning to be discovered. Based on the studies in this survey, the overall effect on the incomes and poverty rates of microfinance clients is less clear, as are the effects of microfinance on measures of social well-being such as education, health, and women's empowerment.

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CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.