Impact assessment methodologies for microfinance: Theory, experience and better practice

Microfinance programs and institutions are increasingly important in develo pment strategies but knowledge about their impacts is partial and contested . This paper reviews the methodological options for the impact assessment ( IA) of microfinance. Following a discussion of the varying objectives of IA it examines the choice of conceptual frameworks and presents three paradig ms of impact assessment: the scientific method, the humanities tradition an d participatory learning and action (PLA). Key issues and lessons in the pr actice of microfinance IAs are then explored and it is argued that the cent ral issue in IA design is how to combine different methodological approache s so that a "fit" is achieved between IA objectives, program context and th e constraints of IA costs, human resources and timing. The conclusion argue s for a greater focus on internal impact monitoring by microfinance institu tions. (C) 2000 Elsevier Science Ltd. All rights reserved.