Research on Microfinance

Global Philanthropy
Wednesday, May 26, 2010

Monday evening New England International Donors co-hosted an event for its network with Tufts University. Our moderator was Dr. Peter Walker, the Director of the Feinstein International Center, and our two panelists were researchers on microfinance Rachel Glennerster from the Abdul Latif Jameel Poverty Action Lab at MIT and Kim Wilson from the Fletcher Graduate School of International Affairs at Tufts University.

Although I have been familiar with microcredit since the 1980s when I learned about the Grameen Bank and its work in Bangladesh, I am a novice in my understanding. I was impressed not only by the panelists, who shared a countervailing view to the unbounded enthusiasm for microcredit and other microfinance tools, but also by the audience who asked probing questions, shared their own experience with microfinance, and engaged in very high level conversations about what the tool of microfinance can, and cannot, accomplish.

At the end of the evening, the group divided up to discuss the kind of advice they would give those who are thinking about entering this space, and below are some of their suggestions.

  • Microfinance is a tool for facilitating change – be clear about what you are trying to facilitate and what your goals are as a donor and investor.
  • Make certain you are funding local organizations on the ground accountable for the loans being made. Work with those connected to the community.
  • Study well as you enter the work and develop your mission – using many sources of information instead of a single organization or point of view.
  • Microfinance is not a panacea – it’s a good tool. Keep your expectations realistic and understand that microfinance on its own is not enough to change a community.

Below is a selection of essential readings/resources on microfinance, suggested by panelists Rachel Glennerster and Kim Wilson. 

Rachel Glennerster, Director of the Abdul Latif Jameel Poverty Action Lab at MIT

  • An op-ed that J-PAL did summarizing how we interpret the evidence on the impact of microfinance
  • A talk Esther Duflo did on our impact of microfinance paper at USAID, it goes into a lot more detail and has a good discussion after her talk
  • A generally good resource on research on microfinance. Here you can look up policy notes on saving, demand, regulatory issues, etc.

Kim Wilson, Lecturer at the Fletcher Graduate School of International Affairs at Tufts University 

What other research should we be looking at? What other advice do you have to share?