What is the Impact of Microfinance on the well being of the poor and what are the conditions for making Microfinance work for the poor in South Asia

Abstract

Findings from this systematic review on the impact of Microfinance interventions suggest an overall positive influence on various outcomes. However, the magnitude of the impact is small in some outcomes, and varies across regions. This mixed evidence could be due to differences in the nature of the intervention, the context, and modes of implementation. The findings of this systematic review broadly suggest that: microfinance interventions appear to have positive influences on income, asset accumulation and consumption with regard to women’s empowerment, outcomes are sensitive to the definitional parameters used. Based on the meta-analysis, the findings suggest that microfinance may lead positive changes microfinance programmes emphasising on girls’ education may lead to beneficial impacts on school enrolment for employment outcomes, microfinance interventions are portrayed as effective mitigation mechanisms during spells of unemployment. Overall a credit-plus programme may lead to more positive impact than standalone lending programmes even for erstwhile participants who left the scheme. The microfinance coupled with skill development programmes, is likely to have positive impact on livelihoods. This could enable participants to obtain more regular employment, create income-yielding assets or micro-enterprises, rather than encouraging their engagement in activities that are low in productivity. This review was funded under the Department for International Development’s Systematic Review and Research Mapping South Asia programme