Agricultural and Applied Economics—Without Apology
Jonathan Morduch, who knows a thing or two about microfinance, has some good news about microfinance in a recent post. Because the randomized controlled trials (RCTs) aimed at evaluating microfinance are designed to test a narrower set of hypotheses than medical RCTs, microfinance research is not as bad as medical research:
Today’s New York Times had an article about microfinance’s woes:
“Microcredit was once extolled by world leaders like Bill Clinton and Tony Blair as a powerful tool that could help eliminate poverty, through loans as small as $50 to cowherds, basket weavers and other poor people for starting or expanding businesses. But now microloans have met with political hostility in Bangladesh, India, Nicaragua and other developing countries.”
The government of Bangladesh is apparently investigating Grameen Bank (although the “present campaign against Yunus doesn’t ring true” to Kristof); lending has contracted in India; and the president of Nicaragua has urged borrowers not to repay their microloans.