Last December, I showed some unwitting prescience by worrying about a backlash against microfinance, the practice of providing small loans – or perhaps savings products or insurance – to poor people. I fretted that there was little compelling evidence that it worked.
A year later, the evidence is arriving and the backlash has begun. The Boston Globe published an article in September, subtitled, “Billions of dollars and a Nobel Prize later, it looks like ‘microlending’ doesn’t actually do much to fight poverty.” Other media have weighed in on all sides, with The Wall Street Journal concerned about a microcredit bubble. What is going on?
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