Microfinance has been whiplashed by the hype cycle. Where it once was seen as a powerful treatment for poverty, recent headlines have favored phrases such as “borrower revolt,” “doesn’t work after all,” and “suicide.” What to make of this cacophony? David Roodman seeks the sensible truth in his new book, Due Diligence: An Impertinent Inquiry into Microfinance, with an investigation that is unprecedented in its depth and breadth. He concludes that, while financial services are no more likely to lift people out of poverty than clean water and electricity, the microfinance movement has built thriving industries that deliver valuable services to millions of poor people. The challenge going forward is to help microfinance play to its strengths. In general, that calls for putting less money into microcredit, to avoid credit bubbles and increase the incentive for microfinance institutions to take savings deposits.
David Roodman is a senior fellow at the Center for Global Development currently focusing on microfinance. He wrote Due Diligence through a pathbreaking "open book" blog, where he shared questions, discoveries, and chapter drafts. In 2011, Roodman ranked in the top 10 on the RePEc list of top young economists in the world. Roodman previously worked at the Worldwatch Institute and spent academic year 1998–99 on a Fulbright in Vietnam. He has never taken a course in economics or statistics.
Featuring the Author
Center for Global Development
Introductory Remarks by
Center for Global Development
Head, Microfinance, Global Financial Markets Department
International Finance Corporation
President and Chief Executive Officer
Consultative Group to Assist the Poor
CGAP is an independent policy and research centre dedicated to advancing financial access for the world’s poor. It is supported by over 30 development agencies and private foundations who share a common mission to alleviate poverty. Housed at the World Bank, CGAP provides market intelligence, promotes standards, develops innovative solutions and offers advisory services to governments, microfinance providers, donors, and investors.
The Center for Global Development is an independent, nonprofit policy research organization that is dedicated to reducing global poverty and inequality and to making globalization work for the poor. Through a combination of research and strategic outreach, the Center actively engages policymakers and the public to influence the policies of the United States, other rich countries, and such institutions as the World Bank, the IMF, and the World Trade Organization to improve the economic and social development prospects in poor countries.
About The MasterCard Foundation
The MasterCard Foundation advances microfinance and youth learning to promote financial inclusion and prosperity. Through collaboration with committed partners in 48 countries, The MasterCard Foundation is helping people living in poverty to access opportunities to learn and prosper. An independent, private foundation based in Toronto, Canada, the Foundation was established through the generosity of MasterCard Worldwide at the time of the company’s initial public offering in 2006.