Book Review: The Economics of Microfinance

Those of us working in development know to be wary of the latest fads. This has naturally led many of us to be cautious of the phrase “evidence-based aid”, popularised most recently by the MIT-based Poverty Action Lab. Evidence-based aid, spearheaded by Michael Kremer, and more recently Esther Duflo, promotes an experiment-based methodology which can be used to assess the effectiveness of development initiatives. Microfinance is particularly suited to such experiments, given that many of the ethical dilemmas that confront the social experimenter are absent in these programs. This book provides a fascinating introduction to the world of evidence-based aid, moreover, it is the first really comprehensive framework for the economics of microfinance. As such, it is a welcome contribution to an industry that has read more…