Economy
Do Microloans Really Help the Poor?
Yes, but they don't pull people out of poverty.
Microloans are small amounts of money lent to people all over the world whose needs aren't met by the formal banking system. Their role as a tool for poverty alleviation has been at the center of some debate. Now, six new studies have mounted evidence that microloans aren't as effective as previously thought.
Researchers at Innovations for Poverty Action and The Abdul Latif Jameel Poverty Action Lab at MIT conducted studies in Bosnia and Herzegovina, Ethiopia, India, Mexico, Mongolia and Morocco. They found that while microloans did improve small business ownership and investment, they did not cause long-term increases in income.