Northern Kentucky University
A Macro-Evaluation of Microfinance
Institution
Northern Kentucky University
Faculty Advisor/ Mentor
Kimberly Weir
Abstract
Microfinance emerged as a poverty alleviation tool in the 1980s as less developed countries were subjected to structural adjustment programs that entailed economic and financial restructuring. Microfinance thus emerged as a means to provide small loans and financial services to the poor for income-generating activities. Large populations with no access to financial services in less developed countries mean the poor have no means to turn from less profitable income sources, such as farming and wage labor, to more profitable, self-employment activities such as owning a business. Since its implementation in the 1980s, the success of microfinance has been debated, due to barriers to that prevent consistency in evaluating microfinance programs and institutions. In order to get a better sense of the effectiveness of microfinance schemes, the variables used to define success are examined to offer a comprehensive and systematic way to evaluate this approach to poverty alleviation.
A Macro-Evaluation of Microfinance
Microfinance emerged as a poverty alleviation tool in the 1980s as less developed countries were subjected to structural adjustment programs that entailed economic and financial restructuring. Microfinance thus emerged as a means to provide small loans and financial services to the poor for income-generating activities. Large populations with no access to financial services in less developed countries mean the poor have no means to turn from less profitable income sources, such as farming and wage labor, to more profitable, self-employment activities such as owning a business. Since its implementation in the 1980s, the success of microfinance has been debated, due to barriers to that prevent consistency in evaluating microfinance programs and institutions. In order to get a better sense of the effectiveness of microfinance schemes, the variables used to define success are examined to offer a comprehensive and systematic way to evaluate this approach to poverty alleviation.