Micro-lending Is Not a Silver Bullet
Tim Harford has a good analysis of the latest research on micro-lending’s effect on poverty. The basic result is that the near and medium term effects are extremely modest. This isn’t too surprising given the relative magnitudes of the intervention and the problem.
But there was always hope that a small perturbation could shift people to a better equilibrium. Alas, it looks like poverty is more robust. Now, there is evidently a lot of research in the pipeline that should tell us more soon. So maybe we’ll have better information for optimizing micro-lending in the future. But don’t expect a silver bullet.