Does microfinance have a soul?

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Tim Harford, a former PSD blogger, weighed in on the microfinance commercialization debate in a piece in the Financial Times last month called The battle for the soul of microfinance. As always, Tim brought some clarity to muddied waters:

There is nothing intrinsically sinful about pawnbroking or intrinsically holy about microloans. What matters is the effect on the clients. And to our discredit, we don’t really know what that effect is. There have been only two serious cost-benefit analyses of microfinance – and they’ve produced a split decision as to whether, given the subsidies involved, microfinance delivered value for donor dollars.

Much of Tim's piece criticizes the overly moralistic tenor of the debate around microfinance, pointing out that what we really need is better empirical evidence of the kind produced through randomized trials. I couldn't agree more, but why then the unfortunate title? I suspect editorial 'assistance'.


Ryan Hahn

Operations Officer

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