An Empirical Analysis of Microfinance: Who are the Clients?

with strong markets and infrastructure supporting microenterprises. Or conversely, programs may locate in very poor areas that desperately need such services, like areas prone to drought, flood or armed conflict. Even if the loans are helpful, without accounting for differences across villages, it might appear that credit makes these households either better off or worse off, an inaccuracy that should be avoided. It is imperative to have impact assessments that carefully account for self-selection in light of the recent views of the Ohio School , which supports the argument that extraordinary extension of credit to poor microentrepreneurs is only burdening the poor with debt. The conflicting views of the benefits of microfinance perpetuate the need to be certain that impact assessments are carefully conducted. If selection bias is a problem and is not properly dealt with, we could be overstating the benefits of