Broadening the Discussion of Microcredit Impact

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On Friday, February 27, CGAP, IPA, JPAL and the World Bank will host a full-day event to share the latest evidence from six randomized controlled trials across six countries. The event will feature the results presented by the researchers themselves, followed by a discussion on what this evidence means for policy and practice.

The impact of microcredit has been widely debated for the past decade, and has been both vilified and celebrated as a development tool. This new set of RCTs goes a long way toward confirming what many have suspected, but argued without much evidence, in recent years: that while microcredit can benefit some, the effects on poverty are modest, not transformational. Microcredit is but one tool in a multi-dimensional approach to addressing the multi-dimensional nature of poverty.

Most in the field of financial inclusion have moved beyond focusing on microcredit in a narrow lens, so in some ways this new round of RCTs is retrospective. However, in thinking about the role of evidence and research in determining the future of financial inclusion, it is helpful to take full stock of the sector, reflect on what we know, and use this knowledge to inform where we go next.

That is why forums like this one are so important. On February 27, all four hosting partners will take the microcredit research out of the vacuum and use it to inform the future of financial inclusion research.

The first three hours of the event, which will be webcast live, will be dedicated to presenting the findings of the six newest RCTs. Following these six presentations, the discussion will broaden to discuss what’s next. For example, technology and digital payment systems are expanding the ways microcredit, as well as other financial services, can be delivered to the poor. Going digital and reducing transaction costs opens up a variety of possibilities and links with other sectors of development. Experts at the event will discuss the nature of these potential links and identify how to fill gaps in research so that future projects are informed by evidence, not conjecture.

Microcredit alone is not an appropriate or effective tool for everyone. The most recent crop of RCTs, as well as others, demonstrate this with clarity. While there is no question that studies like these are important, the real imperative lies in what we do next with quality information such as this. The aim is for this forum to use the six RCTs as a launching point for determining the path forward.


Erin Scronce

Senior External Affairs Officer, Infrastructure Practice Group, World Bank

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