What key questions are needed to investigate the impact of micro-finance banks on small and medium scale enterprises and the growth of an economy

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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If you were going to try to investigate this subject, you would need to ask a number of questions.

  • As far as overall growth of the economy, you could use the usual macro-level statistics like GDP and unemployment rates.  You could ask how those statistics have varied as levels of microcredit have changed.

However, just looking at these numbers would be pretty crude as there are so many intervening variables that could confuse the causal relation between the banks and the growth.  Therefore, you might want to concentrate more on impacts that could be directly attributable to these banks.

In that case, you might want to ask:

  • How many small and medium scale enterprises were financed by these banks?
  • How much money was borrowed by such enterprises?
  • How many of these enterprises were able to remain successful?  How many defaulted on their loans or went out of business?
  • If it is possible, you might want to ask how many of those businesses would have been able to get financing from more traditional banks.
  • Are there geographical clusters of businesses receiving this funding?  If so, did the unemployment rates or income rates of these areas change during the time that microcredit rose?

These will be some of the major questions that you will need to address.

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