evidence that microloans uplift lives?

[Guest]

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[alvincarlos]

Hi! Just heard of Kiva & I think it's an amazing concept.  Am just wondering, how much evidence do we have that the loans Kiva facilitates actually help raise the incomes of people? 

I see that there's an impressively high repayment rate, but I'm wondering if data shows that the money was actually used productively.

Thanks for any insight!

[Cloudia]

I hope that some of the more experienced Kiva lenders here might be able to give you a more accurate, or researched answer.  But for me, I found my own answers to that question through reading the journal section of the Kiva website, where the stories of the borrower's journey is written up either during or at the end of their loans.  In particular, try the "recently recommended" list on the journals page for the "most appreciated" journal updates from the readers.

Welcome to KivaFriends too.

Cloudia

[P, B and J]

As Cloudia said , the journals are a great place to see the impact of the loans:

http://www.kiva.org/app.php?page=businesses&action=listJournals

 

~Jackie~

[Peter S]

If you haven't already looked here -- http://www.kiva.org/about/microfinance/ -- that would be a good place to start, and section 7 there in fact addresses your question pretty directly -- http://www.kiva.org/about/microfinance#7._What_are_the_effects_of -- and includes links to relevant CGAP and UNCDF resources.

Like Jackie and Cloudia have said, the journals are a great place to get a feel for the impact of microloans, and I'd add to that the Kiva Fellows Blog -- http://fellowsblog.kiva.org/ -- where there's some incredibly perceptive writing by people who have spent time with Kiva's Field Partners and have seen how it works up close.

Peter

[Soriak]

This is the closest I could find to a study about it: http://pdj.sagepub.com/cgi/content/abstract/6/3/201

The socio-economic impacts of microcredits on women's welfare were studied in northeastern South Africa using a qualitative semi-structured interviewing method.   The study focuses particularly on the benefits, disadvantages and challenges obtained from The Small Enterprise Foundation (SEF) microcredit village programmes   (Micro Credit Programme (MCP) and the T'shomisano Credit Programme (TCP)). Impacts of microcredits and a comparison of two programmes were analysed on a household  level. The results revealed that a number of the poorest women have been released from deepest poverty through the opportunities provided by SEF. The MCP clients, who tend to have a better starting point, seemed to be more educated, able to diversify and improve their businesses as well as being more capable of protecting themselves against vulnerability than the poorer TCP clients. Many repayment problems were caused by group heterogeneity. Particularly in the MCP, the incentive to free-ride seemed to be a problem phenomenon. These drawbacks demonstrate that there are still   some unresolved disadvantages in the programmes.

Sadly the full paper is gated and requires either a subscription or a fee to access it for a day. Without the paper, there's no way to know what could be responsible for the free-ride problem. From what I've read and heard, though, in group loans there appears to be a significant pressure to keep up with payments from the rest of the group. (as they'd otherwise be liable for it) It's hard to tell for individual loans, because we don't really know if a borrower actually is making repayments, or if he (or she) has defaulted and the MFI is making the repayment from its own money. They have an incentive to do so, as the repayment rate is important for them to attract more money (not just through Kiva) at better conditions. If they can avoid a loan defaulting by spending $100, that can be a smart move.

edit:
Interestingly, I can't find anything about the impact on the communal level. Let's say people in a village of a few hundred people start to have access to microloans. Does this boost the welfare of everyone in the village? (Fisher receives a loan, sells more fish in the city, spends the money in his local town?) Looks like much research remains to be done in this area.

[P, B and J]

In addition to the above links provided by Peter and Soriak, here's another link on the Kiva website where they list Books on microfinancing (including one for children), Websites and Organizations, and last but not least, The Virtual Library on Microcredit: http://www.kiva.org/about/learn/

Of note, in The Virtual Library on Microcredit (http://www.gdrc.org/icm/index.html), there are Case Studies.  Look in the Main Menu section in the upper left-hand portion of the page, the links are grey boxes.

I can't take credit for finding all that info, it was actually posted some time ago by KF RichardF in another thread on this forum.

[Diane R]

I'm going to drop a pointer here to a post I made in a related thread.  I see evidence every day on Kiva.org of uplifted lives.  This post was about just one of many hundreds.

http://www.kivafriends.org/index.php/topic,2070.msg30308.html#msg30308

--Diane.

[quizzoid]

I thought that this recent blog entry from a Kiva Fellow was a good response to the question.

http://fellowsblog.kiva.org/category/all/dylan-higgins/

Look for the entry dated May 29, entitled "Final Thoughts."

[Henry]

  "Final Thoughts" is also mentioned in this topic:    http://www.kivafriends.org/index.php/topic,2102.msg31076.html#msg31076