Analyzing the Effects of Microfinance

Abstract

Microfinance and the notion of helping the poor help themselves by providing small loans to serve as startup capital and encourage entrepreneurship has been increasing in popularity as the new panacea to poverty since its development by Muhammad Yunus and the Grameen Bank. In order to accurately identify the validity of this claim, this thesis presents a comprehensive analysis of the academic studies that have been done to date in order to determine what we know about the effectiveness of these programs. By analyzing studies based on three major questions: Who is being studied? What variables are being studied? and How is the analysis done? This research addresses the differences between conclusions and finds that overall, microfinance may be effective for some populations, but is not necessarily worthy of such high acclaim.