MICROCAPITAL BRIEF: CGAP (Consultative Group to Assist the Poor) Brief “Measuring Changes in Client Lives Through Microfinance: Contributions of Different Approaches” Finds Existing RCTs Insufficient to Prove Success of MicroCredit

A recent brief published by CGAP (Consultative Group to Assist the Poor) examines different approaches to measuring changes in client lives that may be attributed to microfinance.

The authors of the brief, Mayada El-Zoghbi, senior microfinance specialist at CGAP, and Meritxell Martinez, a microfinance analyst with CGAP’s Transparency and Market Intelligence Team, review three impact evaluations of microcredit programs that have been released in the last three years [1]. The evaluations, which were conducted in India, the Philippines and Morocco, used randomized controlled trials (RCTs), “an evaluation methodology that randomly assigns an intervention to a treatment group and withholds it from a control group,” to assess microfinance programs [1] [2]. The brief examines RCTs and other social performance monitoring and assessment tools in microfinance to determine whether these assessments can justify MFIs in claiming that their programs improve client welfare [2].

The authors conclude that with only three completed RCTs examining the impact of microcredit, more evidence is needed before conclusions can be drawn on whether microfinance is beneficial to customers [2].

The brief can be accessed at: http://www.cgap.org/gm/document-1.9.50966/MeasuringBenefits_Brief.pdf

By: Alexandra Pattee, Research Associate

About CGAP (Consultative Group to Assist the Poor): Housed at the World Bank Group, CGAP (Consultative Group to Assist the Poor) is an independent policy and research center dedicated to facilitating the provision of financial access to poor people worldwide. CGAP is supported by approximately thirty development agencies and private foundations. Its mission is to provide market intelligence, to promote standards and to offer advisory services to governments, microfinance providers, donors and investors.

Sources and Resources:

[1] CGAP Press Release, “Measuring Changes in Client Lives through Microfinance: Contributions of Different Approaches”, http://www.cgap.org/p/site/c/template.rc/1.9.50966/

[2] CGAP Brief, “Measuring Changes in Client Lives through Microfinance”, http://www.cgap.org/gm/document-1.9.50966/MeasuringBenefits_Brief.pdf

MicroCapital’s Microfinance Universe: CGAP (Consultative Group to Assist the Poor), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=CGAP+%28Consultative+Group+to+Assist+the+Poor%29

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