Measuring Transformation: Assessing and Improving the Impact of Microcredit

Overview: The question of impact assessment is one that continues to plague microcredit practitioners. Some contend that existing impact assessment studies are meaningless, while others maintain they are absolutely necessary. The authors of this paper advocate for a new paradigm for impact assessment. They outline the key principles for conducting impact audits that include measurement of transformation among clients. They also review a series of practitioner-oriented impact assessment tools and outline future challenges for practitioners, donors, and academics in advancing the usefulness of impact assessment efforts. Summary: The debate about impact assessment begs the question of “measuring impact for what purpose?” The authors support the use of impact measurement tools that incorporate financial measures and indicate transformation—that is, deeply rooted change in the lives of individuals or communities—among clients. This paper acknowledges the problems with measuring impact, including issues of academic rigor, cost, and required expertise. Nevertheless, the authors cite the weaknesses of assuming the marketplace is an adequate proxy for impact data and maintain that practitioners should measure impact in order to determine whether microcredit institutions have met their stated purpose—alleviating poverty.

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