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Is there ample evidence that microfinance works? I thought it's been fairly controversial. It just doesn't seem like it supports long-term solutions to develo
by tryitnow 11y ago
Is there ample evidence that microfinance works? I thought it's been fairly controversial.
It just doesn't seem like it supports long-term solutions to developing world poverty.
My hypothesis would be that microfinance just encourages subsistence farmers to keep doing subsistence farming, which is pretty inefficient.
- aaron695 11y agoSubsistence farmers by definition don't need loans. So you could see in theory how it could allow them to get out of subsistence farming. IE Buy tools they can't afford that would allow them to increase yield to pay for the loan and profit to send kids to school or something. But the reality is microfinance has always been available, called things like loan sharks. Yet they have stayed poor. So you need to think why this microfinance would work. Some microfinance bring training with the loan for instance. Lowing the interest % is the equivalent to giving them money direct, which has some evidence it works. But I tend to agree "microfinance" itself doesn't work.