A positive local impact

Although it is difficult to determine the global impact of microcredit around the world, a dozen studies have demonstrated its positive social and financial impacts on certain communities.

A very recent study carried out by researchers from the World Bank into Bangladeshi villages showed the positive impact of microcredit on those communities. The study, which is based on responses from more than 1,500 households in 87 Bangladeshi villages surveyed three times over a period of 20 years, concludes that microcredit “increases (the microentrepreneurs’) income and spending, the amount of work available to them, non-land holdings, net assets, as well as the education of boys and girls.”

By supporting this form of solidarity, you are making a direct contribution to the recipient’s social and financial development, and more specifically:

  • the direct improvement of living conditions for the recipient and his/her family
  • the schooling and education of the recipient’s children
  • the development of the recipient’s access to healthcare
  • the empowerment and emancipation of women who are individually involved with microcredit

From an economic standpoint, there are notable positive effects regarding:

  • increased levels of income
  • increased stability of income
  • reduced vulnerability in the face of external shocks
  • progression from the informal economy to the formal economy

 

Working towards better social impact assessment

Many research groups are currently working to develop more practical impact measurement tools.

For example, the CGAP and the Ford Foundation have developed the Progress out of Poverty Index (PPI), with which they are able to assess their clients’ economic situations on an ongoing basis.

The IRIS Center at Maryland University has developed a similar tool: the Poverty Assessment Tool (PAT). Adapted to conditions in each country and designed to gauge the prevalence of poverty among micro-entrepreneurs, some of our partners are to be found among those who are currently making use of the PAT.