Microfinance institutions aim to reduce poverty. Some assess their impact through a cross-sectional impact methodology which compares veteran to new participants and then calls any difference between these two groups the "impact" of the program. Such studies have risen recently in popularity because they are cheap, easy to implement, and often encouraged by donors. USAID, through its AIMS project, encourages this methodology with its SEEP/AIMS practitioner-oriented tools. This paper intends to inform practitioners about the perils of using such a strategy, and suggests a couple of solutions to some of the larger problems with this approach.
Dean S. Karlan is a Ph.D. candidate in Economics at the Massachusetts Institute of Technology. He has a joint MBA/MPP from the University of Chicago and was a consultant to FINCA International from 1992-1995.
Journal of Microfinance
Issue and Volume
BYU ScholarsArchive Citation
Karlan, Dean S.
"Microfinance Impact Assessments: The Perils of Using New Members as a Control Group,"
Journal of Microfinance / ESR Review: Vol. 3
, Article 5.
Available at: http://scholarsarchive.byu.edu/esr/vol3/iss2/5