Impact of Credit: How to Measure Impact, and Improve Operations Too
This paper discusses advantages and challenges of evaluating impact of a microfinance program.
Impact evaluations are similar to market and client research, and help program managers design better products and processes. They guide future decisions taken by financial institutions, policymakers, donors and investors. Challenges to impact evaluation include:
- Difficulties in measuring changes in clients lives had the program not existed;
- Identifying suitable comparison groups;
- Bias from program placement;
- Difficulties in the use of randomized controlled trials;
- Barriers of scale.
Microfinance can push forward into new frontiers by creating more win-win opportunities, where impact research also answers key management questions. Rigorous evidence on impacts in general, as well as relative impacts of specific products and processes on clients and institutions, would help donors, investors, policymakers and practitioners deepen the quantity and quality of financial access.
