Microfinance: The Good Housekeeping Seal of Approval?

In response to a glib comment of mine, one reader asks:

You seem to be consistently unimpressed with microfinancing efforts. Why?

Unimpressed is probably the wrong word. I’d say skeptical, at least until some of the actual evidence comes in. What little we have suggests that microfinance is usually a good thing, but not in the ways we expect. (Follow this blog for the emerging story.)

Now, I don’t think we need a randomized trial before scaling every intervention. But I might like to see a little evidence before something becomes the largest and most expansive micro-development intervention in human history.

The main reason for my glibness: microfinance seems to gone from a sometimes-sensible intervention to the Good Housekeeping Seal of Approval for every NGO effort. What can we do to help the poor? Microfinance. How to build governance and local capacity? Microfinance sounds good. How to be more tasty and less filling? Why not microfinance?

Knee jerk policy norms aren’t limited to lending. Had a civil war? You need a Truth and Reconciliation Commission. Printing your own currency? An independent central bank is clearly the solution. Having an election? Why, you must need international monitors.

After a point, these things promulgate not because they are good or bad in the specific context, but it is because this is what good countries or NGOs do. Most are probably good for most places, but not always.

My colleague Susan Hyde has a book coming out on the subject, with the most attention how the norms of international election monitoring arose. Here’s a paper partly on the subject.

Unless it’s been written, the microfinance-as-norm dissertation has yet to be written. Anthropology PhDs: this is a chance to get zesty.