Another great summary blog on last week's Microfinance Impact & Innovation Conference by Laura Starita over at Philanthropy Action: . . .
What We Don't Know About Microfinance . . .
by Laura Starita . . .
Both days one and two of the conference were largely dedicated to communicating the results of recent impact studies—i.e. what we “know” in microfinance. Yet the first session of Day 2 took a step back to discuss what we don’t know, but should. Panel participants were Chris Dunford from Freedom from Hunger, Rich Rosenberg from CGAP and Abhijit Banerjee from JPAL. . . .
Chris Dunford spoke first, giving a thoughtful presentation that effectively amounted to a distillation of the disadvantages of RCTs for practitioners. He called for a broader focus on evaluation and not just impact studies. Evaluation, in his mind, is the practice of answering definitional questions (What do we mean by microfinance?); value questions (Are the poor overindebted? Are interest rates too high?) and decision making questions (Why don’t policy makers and donors consider the results of RCTs when making funding decisions?) as well as impact questions (Does microfinance improve the lives of the poor?). . . .
Read MoreThe emerging answer seems to be similar to the answer to the question: "Does Aid Work?" It depends. . . .
We just finished up the first panel session at Microfinance Impact 2010, moderated by Jonathan Morduch, and with presentations by Dean Karlan (Yale and IPA), Abhijit Banerjee (MIT), Esther Duflo (MIT), Carlos Danel (Compartamos Banco) and Tanguy Bernard (Agence Française de Développement). . . .
Dean Karlan began by setting the scene, describing the remarkable “audacious to humble” transformation of claims about microcredit. From the magic bullet for fighting poverty, to merely lifting millions from poverty, to raising consumption, to just helping the poor cope, to not doing any of that but allowing for greater freedom and empowerment. . . .
Why do we care about measuring impact? For three reasons . . . . . .
Read MoreFor those of you who couldn’t attend Wednesday’s event, “Microfinance's Social Impact: Cutting through the Hype,” sponsored by the Microfinance Club of New York and hosted by FAI, here’s a recap. . . .
The panel featured FAI’s Jonathan Morduch, David Roodman, a senior fellow at theCenter for Global Development, Chris Dunford, President of Freedom from Hunger, and Jody Rasch from Moody’s Investors Service. . . .
We were happy that the moderator started the event by making the important distinction between social performance measurement and impact evaluation. Social performance measurement seeks to answer the questions of how MFI clients are doing, and how MFIs can help serve those clients better. Social impact evaluation, which is the focus of much of FAI’s research, tries to answer the question of what would have happened to people in the absence of microfinance. . . . . .
Read MoreIn 2009, the results from the first randomized control trials in microfinance were released – and they’ve been stirring up controversy ever since. The studies’ failure to find a strong causal link between financial access for the poor and poverty reduction spawned a particularly heated debate between microfinance practitioners and advocates versus researchers. . . .
While all of the parties share the same goal of improving lives, team advocate has shown reluctance to embrace the results, continuing to point to anecdotal evidence (in joint written statements no less), while team research has stuck to its guns, emphasizing the potentially positive outcome of these trials – i.e., the opportunity to understand how to better serve poor clients . . . . . .
Read MoreIf you only read one critique of the recent microfinance impact "statement," it should be Chris Dunford’s over at Freedom from Hunger. We’ve taken the liberty of excerpting our favorite parts for you and explaining why exactly we agree. . . .
First, Chris says of Freedom From Hunger’s own experience with serious impact research: “The results…have validated some of our claims and failed to validate others. We are challenged to embrace the revealed weaknesses and to reflect with our practitioner partners and take action collectively to make important improvements in our products and services.” . . .
We wholeheartedly agree that taking evaluation more seriously can help MFIs improve what they’re doing. We’ve pointed to BASIX as another good example of an organization that has used evaluations as a powerful force for constructive change in the way it offers financial services to the poor. . . .
“The recent research studies in India and the Philippines seem to conform to best practices of credible impact research, so let’s accept the results for what they are, which are mostly positive and realistic.” . . .
Yes. Microfinance is not the answer to ending poverty as we know it—nor should it be . . . . . .
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