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Microcredit: Hero or Anti-Hero?

Is the glass half empty or half full? For the meaning of this phrase, click here

How many of you have come across the use of this phrase or may have used it yourself to indicate a situation? While scripting a factsheet on studies conducted by CMF pertaining to microcredit [will be released soon], I came across an interesting blog post by Duncan Green (Head of Research at Oxfam GB), Link. A lot has been spoken against on how microcredit and microfinance at large has not succeeded in the scheme of alleviating poverty. It is quite obvious that no singular means of effort will better things for the poor. Opening a bank account alone does not guarantee better health or education for the poor, somehow the question of how can it benefit the poor person or household is not being talked about.

Yet, as David Roodman said, microcredit can produce significant benefits for the poorest people, by enabling them to manage volatile and uncertain incomes. Read this for more, also listen to this talk by David Roodman, Link. So if there is a positive that can be drawn from the system, should not effort be concentrated on learning more about the same? There is an interesting perspective on how development economists can learn from musicians – Link, you would find this link in Duncan’s blog post that I mentioned in the beginning.

So for now, the question of whether microcredit has played the role of a hero or anti-hero to the poor should not be the concern – rather focus on what more can be done? Where did existing measures fail to score and why did they not? I feel these questions are the ones researchers in this field should focus on. Some of the CMF evaluations pertaining to microcredit are:- Miracle of Microfinance? Evidence from a Randomized Evaluation, Social Networks and Microfinance, Does Microfinance Repayment Flexibility Affect Entrepreneurial Behaviour and Loan Default? and also the much talked about Impact of Access in Rural Tamil Nadu: Evidence from a Randomized Control Trial

It is not just a matter of results alone, a lot depends on the perspective: half empty or half full? You decide …


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