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Great expectations: microfinance and poverty reduction in Asia and Latin America


  • Weiss, John
  • Montgomery, Heather


Microfinance institutions (MFIs) are often seen by aid practitioners as a manifestly effective means of improving the position of the poor. Despite this widely held view, detailed research studies have been much more guarded about the impact of MFIs. In particular, several studies have raised doubts about the effectiveness of MFIs in reaching the “core poor”. This paper surveys the evidence from Asia and Latin America and contrasts experiences in the two regions. Studies on the former have been carried out more “rigorously”, but in both regions the evidence that microfinance is reaching the core poor is very limited.

Suggested Citation

  • Weiss, John & Montgomery, Heather, 2004. "Great expectations: microfinance and poverty reduction in Asia and Latin America," MPRA Paper 33142, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:33142

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    References listed on IDEAS

    1. Lapenu, Cécile & Zeller, Manfred, 2001. "Distribution, growth, and performance of microfinance institutions in Africa, Asia, and Latin America," FCND briefs 114, International Food Policy Research Institute (IFPRI).
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    4. Navajas, Sergio & Schreiner, Mark & Meyer, Richard L. & Gonzalez-vega, Claudio & Rodriguez-meza, Jorge, 2000. "Microcredit and the Poorest of the Poor: Theory and Evidence from Bolivia," World Development, Elsevier, vol. 28(2), pages 333-346, February.
    5. Paul Gertler & David I. Levine & Enrico Moretti, 2009. "Do microfinance programs help families insure consumption against illness?," Health Economics, John Wiley & Sons, Ltd., vol. 18(3), pages 257-273.
    6. Park, Albert & Ren, Changqing, 2001. "Microfinance with Chinese Characteristics," World Development, Elsevier, vol. 29(1), pages 39-62, January.
    7. Mark M. Pitt & Shahidur R. Khandker, 1998. "The Impact of Group-Based Credit Programs on Poor Households in Bangladesh: Does the Gender of Participants Matter?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 958-996, October.
    8. Mark M. Pitt & Shahidur R. Khandker & Omar Haider Chowdhury & Daniel L. Millimet, 1998. "Credit Programs for the Poor and the Nutritional Status of Children in Rural Bangladesh," Working Papers 98-4, Brown University, Department of Economics, revised 16 Jan 1998.
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    10. Coleman, Brett E., 1999. "The impact of group lending in Northeast Thailand," Journal of Development Economics, Elsevier, vol. 60(1), pages 105-141, October.
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    12. Joseph P. Kaboski & Robert M. Townsend, 2005. "Policies and Impact: An Analysis of Village-Level Microfinance Institutions," Journal of the European Economic Association, MIT Press, vol. 3(1), pages 1-50, March.
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    More about this item


    microfinance; poverty; Asia; Latin America;

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages


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