Latest Findings from Randomized Evaluations of Microfinance

This paper summarizes research findings from a new body of empirical evidence that uses randomized evaluations to compare how one group responds to access to specific new financial services against how a comparable group fares without those services. It goes back to the first studies that used this approach and summarizes a series of research studies presented at the October 2010 Microfinance Impact and Innovation Conference in New York.

The paper reviews results from randomized evaluations that measure the impact of microcredit and microsavings on business investment and creation, consumption, and household well-being. It presents evidence from evaluations of products and delivery design. It also discusses the evidence on microinsurance products. Conclusions include:

• Poor people face various limits, and their ability to capitalize on opportunities varies greatly;
• There is a need to find simple ways to identify those differences and cater to them with the right products delivered with the right design;
• One-size-fits-all products will not bring benefit to borrowers or providers;
• Microfinance providers may evolve a new generation of improved services and products that reliably and flexibly help poor people.