This paper discusses Kathleen Odell’s recent paper, Measuring the Impact of Microfinance: Taking Another Look. It disagrees with her on the importance of Randomized Controlled Trial (RCT) studies. It also dismisses the arguments and findings of David Roodman’s Microfinance Open Book blog as being based on wrong questions.
The research question underlying the RCT studies is, “Do women who have continued access to microfinance have significantly higher household incomes than similar women who don’t have such access?”
The study recommends the Progress out of Poverty Index (PPI) as a simple, cost-effective way of measuring the likelihood a person is poor, in terms of household expenditure. It also suggests that poor people should decide on the effectiveness of MFIs, not academics or donors.