My recent post discussing the unflattering findings from a randomized control trial of microfinance prompted some heated discussion of just what evaluation can tell us in this context. It turns out that a new Policy Research Working Paper takes up exactly this issue (Impact Assessments in Finance and Private Sector Development: What Have We Learned and What Should We Learn?).
If you got worked up about the microfinance findings, then this paper is definitely worth a read. For those who are more time-strapped, here is the CliffsNotes version:
- Randomized control trials can't tell us everything, but that's OK because there are other useful ways to measure impact.
- Evaluations should focus as much on the question of why there was an impact as on whether there was an impact.
Update: David McKenzie, the author of the working paper, has a question for those of you involved in finance and private sector development projects: If you haven't incorporated an impact assessment into your project, why not? And (this one is my own) what would it take to make it possible for you to include this kind of assessment?
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