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> Posted by Center Staff

How does the idea of “measuring microfinance impact” play out on the ground?

Aurélie Dagneaux takes a close look at this question through the lens of her observations of Fundación Paraguaya. She’s been visiting there as part of the ACCION International Ambassadors. She and the other Ambassadors have been deployed around the globe to gain insight into the state of the industry. Their blog is here; you can even subscribe.

Here at the Center blog, we have already highlighted reports from Ambassadors Nirav Chheda, Pamela Chang, David Firth Bard, Stephen Matthew Lee, Jason Loughnane, Wei Wei Pan, and Leah Vinton.

Dagneaux’s post “Measuring Microfinance Impact” begins:

As ACCION Ambassadors, our mission is to document the impact of microfinance.

Let me share with you what my first week in Fundación Paraguaya taught me. I’ll shed a light on some other experiences I had in other places as a microfinance consultant.

“Fundación en Acción”

For our readers already familiar with the Fundación, I’ll be brief on what they do.

Fundación Paraguay is a 25-years old NGO, conducting 3 main programs: microfinance, self-sustainable agricultural schools, and youth business education. I’ll only discuss here the microfinance part. I will even narrow it only to its village banking part (making the bulk of clients: 70%). The village banking consists of women committees of 10-15 entrepreneurs each. There are over 2,000 committees, representing 32,000 clients. Women receive loans, starting from 100,000 Guarani’s ($25), up to 1,200,000 Guarani’s ($300) after a few loan cycles. FP also provides them with training (ranging from financial and business education, increasing your sales, business plans to interpersonal relations). Women are required to save money in order to educate them to do so. Unfortunately that’s not a service of the Fundación itself, as it is not a regulated bank enable to take savings, but a NGO.

Last year, Fundación Paraguay – like many organizations maturing – started feeling the need to measure their impact on client’s lives and to document it. Read the rest of this entry »

> Posted by Guy Stuart, Lecturer in Public Policy, Harvard Kennedy School

Karlan and Appel’s book More Than Good Intentions is an easy, and often compelling, read.  Initially, you are drawn in by the anecdotes that start each chapter, which Karlan and Appel use to illustrate a broader development issue that they then tackle in the rest of the chapter.  But the stories that really drive the chapters forward, and make the book compelling, are the ones which start with Karlan describing how he teamed up with people with “good intentions” – people trying to deliver goods and services to poor individuals and families in developing countries, to gather data in an effort to address a problem they both want to solve.  In essence, this is the strength of the work Karlan and Appel describe in this book: For researchers to help in efforts to solve the problems confronting poor people, they have to begin with the problems they and the people who are trying to help them face, and gather evidence regarding what works and what does not work in solving those problems so that they then can act on that evidence.

This is a pretty simple message, but it is an important message, because this is not how research is necessarily done.  Professional researchers tend to want to answer a particular question that fits their research agenda or the agenda of the organization for which they work.  It may be the case that these agendas coincide with the problems facing the poor, generally, but even if that is the case, it is unlikely that the research will be specific enough to be useful, nor will the results of the research be reported in such a way that anyone can act on them.

Karlan and Appel want us to believe that Randomized Control Trials (RCTs) are an essential tool in identifying solutions to problems through research.  In fact, there is clear evidence that they think this is the only way to do research.  They continuously, and condescendingly, equate “rigor” with the use of RCTs, which begs the question: Are all the people who generate evidence about what works and what does not work without using RCTs not doing rigorous work?  Are RCTs the only way to get to the truth of the matter? Read the rest of this entry »

> Posted by Center Staff

One of the more profound reflections on the crisis in Indian microfinance comes to us from Vijay Mahajan, who is undertaking Shodh Yatra, an “extended grassroots enquiry into the lives and livelihoods of poor people.”

His journey comes in the form of a “walk while in a village or a town, stopping by every once in a while to have a dialogue; and drive between habitations.”

Mahajan, who makes Gandhi a spiritual touchstone as he blogs about his experiences, is a trailblazer in Indian microfinance who was listed by BusinessWeek’s Asia edition as being among the country’s 50 most powerful people.

“I intend to do this [Shodh Yatra] for 60 days over a period of Jan 30, 2011 (today) till April 18, 2011,” he writes. “The beginning date and place are significant to me – today is Gandhiji’s martyrdom day and I am starting from his Ashram in Sevagram, Wardha; near Nagpur in Central India.” Read the rest of this entry »

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The views and opinions expressed on this blog, except where otherwise noted, are those of the authors and guest bloggers and do not necessarily reflect the views of the Center for Financial Inclusion or its affiliates.