Nearly two decades ago, when the concept of microfinance as a poverty reduction tool was in its infancy, there was hope that microcredit would transform economic and social structures. With its focus on reaching the previously unbanked, microcredit was expected to bring about change at the household level, a market in developing countries that traditional financial institutions had failed to reach.
Fifteen years on, the microfinance industry is estimated at $60-100 billion, with 200 million clients, but the results have been mixed. Critics cite modest benefits associated with microcredit, overindebtedness, and a trend toward commercialization that is less focused on serving the poor.
This March, the Research Department’s Policy Research Talk was given by Lead Economist Robert Cull, who drew on a variety of data and research to examine the varied track record of microfinance institutions, and where this approach to poverty reduction might be headed...
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