Edited by John Weiss
Chapter 7: Micro-finance and Poverty Reduction in Asia
7. Micro-finance and poverty reduction in Asia John Weiss, Heather Montgomery and Elvira Kurmanalieva INTRODUCTION The micro-ﬁnance revolution has changed attitudes towards helping the poor in many countries and in some has provided substantial ﬂows of credit, often to very low-income groups or households, who would normally be excluded by conventional ﬁnancial institutions. Bangladesh is the starkest example of a very poor country, where currently roughly one quarter of rural households are direct beneﬁciaries of these programs (Khandker, 2003). Much has been written on the range of institutional arrangements pursued in different organizations and countries and in turn a vast number of studies have attempted to assess the outreach and poverty impact of such schemes. However, amongst the academic development community there is a recognition that perhaps we know much less about the impact of these programs than might be expected given the enthusiasm for these activities in donor and policy-making circles. To quote a recent authoritative volume on micro-ﬁnance: MFI ﬁeld operations have far surpassed the research capacity to analyze them, so excitement about the use of micro-ﬁnance for poverty alleviation is not backed up with sound facts derived from rigorous research. Given the current state of knowledge, it is difﬁcult to allocate conﬁdently public resources to micro-ﬁnance development. (Zeller and Meyer, 2002) This is a very strong statement of doubt and in part reﬂects lack of accurate data, but also in part methodological difﬁculties associated with assessing exactly what...
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