Microfinance

I just finished reading The Economics of Microfinance by Beatriz Armendariz and Jonathan Morduch. My knowledge of microfinance is limited, so it was a good introduction to some of the issues involved with getting credit to the poor and evaluating the effects. Some parts are a little technical, but overall its a good, accessable description of why we care.

While reading it I kept thinking back to a blog post from Rachel Strohm where she quotes her father saying that microloans are more like credit cards in that people use them to smooth over their consumption and have something in case of emergency.

Interest rates may be high, and the effect on poverty is mixed, but they offer flexibility that many people sorely need.