Microcredit has spread rapidly since its beginnings in the late 1970s, but whether and how much it helps the poor is the subject of intense debate. Despite high hopes for microcredit’s potential to transform the lives of the poor, there is a lack of concrete evidence demonstrating its impact. Skeptics fear that microfinance is displacing more effective anti-poverty measures or even contributing to longterm poverty via over indebtedness. This paper reports on the first randomized evaluation of the impact of introducing microcredit in a new market. Based on a survey of slums in Hyderabad, India, the authors find mixed results on a range of impact measures.
Full published paper is available here.