Understanding the Impact of Microfinance
What effects do microfinance programs have on the people they serve? This is a question the researchers of Measuring the Impact of Microfinance: Looking to the Future aimed to answer. Authored by Professor Kathleen Odell for the Grameen Foundation, the paper examined previous studies and current data on various microfinance initiatives effectiveness on impacting the poor.
According to the World Bank, about 2 billion people in the world are “unbanked,” and do not have access to or use banks or other financial institutions. Over 200 million people of these “unbanked” are served by microfinance institutions.
“What did she find? First, she found that the most widely circulated studies have discovered consistently positive, if modest, impacts on the welfare of the typical beneficiary of microfinance products and financial inclusion initiatives, and significantly positive impacts on 5 to 10 percent of clients (of whom there are an estimated 200 million globally). Second, despite some unsubstantiated claims to the contrary, she found no evidence of any pattern of negative effects,” writes Alex Count, founder of the Grameen Foundation.
(Evidence of microcredit’s and savings impacts on lives are detailed in the charts below.)
The detailed results from the study allows microfinance institutions, like FINCA, to sharpen their focus on providing the most beneficial services and products to clients, by providing the services that are actually needed, at the right time, and that are relevant to their specific circumstances.
Source: Measuring the Impact of Microfinance: Looking to the Future, December 2015.