For three decades, microfinance institutions have given out small loans to the world's poor -- mostly women -- and amassed hundreds if not thousands of case studies showing that the loans help alleviate poverty, improve health, increase education and promote women's empowerment. Skeptics, however, have argued there is not enough hard data to prove that microfinance transforms lives on a large scale, and they have called for more rigorous analysis.
Now two new studies have raised doubts about long-held beliefs in microfinance. The studies -- which used randomized controlled trial methodologies -- did find that microloans helped poor entrepreneurs boost profits in their businesses. However, the studies found little impact on health, education, average consumption, women's decision making or self-reported well being.
The unexpected results, which were quickly picked up by The Economist and other media, created a stir in the microfinance community.
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