Microfinance and poverty: what do we know?

Posted on 29 November 2017

A new systematic review from Mathilde Maîtrot and Miguel Niño-Zarazúa explores the impact of microfinance on poverty and wellbeing.

Microfinance in India: Centre leaders tally the week's loan payments. Credit: Peter Haden / Flickr (CC BY 2.0)

Over the last 35 years, microfinance has been generally regarded as an effective policy tool in the fight against poverty. Yet, the question of whether access to credit leads to poverty reduction and improved wellbeing remains open.

To address this question, the authors conducted a systematic review of the quantitative literature of microfinance’s impacts in the developing world, linking inputs to impacts on several welfare outcomes.

While their findings were complex, the results indicate that, at best, microfinance induces short-term dynamism in the financial life of the poor. However, there was no compelling evidence that this led to longer-term reduction in poverty.

Read the full paper: