Cost Benefit Analysis Applied to Micro Credit Program Evaluation
This paper tries to review program evaluation approaches in microfinance. It gives the salient points of different methods which include impact assessment, process evaluation, and cost benefit analysis.
The paper examines the application of cost-benefit analysis (CBA) in comparison to other impact assessment methodologies in evaluating micro credit programs. Some of the application issues that the paper identifies for CBA are:
- Identifying the production function or the impact chain;
- Setting boundaries of evaluation;
- Ascertaining the units: the household, the enterprise or the institutions; environment or level: donor agency, regional NGO office or local project office;
- Computing values to costs and benefits for which no market exists;
- Assessing financial and time constraints as micro credit programs are more prevalent in less-developing countries.
Finally, the paper concludes that impact assessment methods are almost exclusively used in microfinance program evaluation, whereas there is hardly any study using cost benefit analysis. The author feels that this is because CBA is complex and requires additional resources, such as professional researchers, and additional information.
