VoxDev Development Economics S6 Ep4: What have we learned about microfinance?
Jan 30, 2025
Join experts Jing Cai from the University of Maryland, Muhammad Meki from the University of Oxford, and Simon Quinn from Imperial College as they dive into the multifaceted world of microfinance. They discuss its historical roots and evolving practices, highlighting successes and challenges in evaluation. The conversation reveals intriguing insights into asset-based microfinance and its transformative potential for underserved communities. They also address the balance between profit and purpose, emphasizing the need for innovative, tailored financial solutions.
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Microfinance Definition
- Microfinance offers various financial services to those lacking traditional banking access.
- It primarily aids low-income individuals and communities through small loans, savings, insurance, and other products.
Microfinance History
- Muhammad Yunus's Grameen Bank popularized microfinance in the 1970s.
- However, earlier examples include Jonathan Swift's 17th-century Irish loan funds and Benjamin Franklin's 18th-century American funds.
Evaluation Challenges
- Evaluating microfinance impact is difficult due to selection bias in lending and borrowing.
- Randomized evaluations help but still face challenges like only assessing the impact on marginal borrowers.