Micro-Lending Not as Impactful as Previously Thought

National Public Radio has surveyed research on the impact of micro-lending to entrepreneurs around the world; in a number of well-controlled studies, the finding was that the loans were used to expand businesses, but the expansions were modest even by local measures and in none of the studies did the average borrower end up significantly increasing their income; micro-loans did have other benefits such as debt consolidation; one MIT economist, Abhijit Banerjee, found that straight cash grants to global entrepreneurs with low incomes did have a significant effect on long-term income generation, and hypothesized that the strict repayment structure of microfinance might be limiting its potential; the average microloan size is $200 in South Asia and $3,000 in Eastern Europe.  Source

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