[worldadventurer]

Here's another critical perspective on microloans:

A local “demand constraint” underlies two of the main shortcomings associated with microcredit: displacement and exit. Displacement occurs when new jobs and incomes registered in one microcredit-supported enterprise are cancelled out by the decline in jobs and incomes in incumbent competitor microenterprises. Exit is the process whereby both new and existing microenterprises are forced to close, due to the additional supply of informal microenterprises operating in the same sector.

Nonetheless, these obvious shortcomings also help explain why, as even longstanding supporters now acknowledge, there is no empirical evidence showing microcredit cuts poverty. As a rule, it simply boosts the rate of informal microenterprise entry, which is then followed by an equally high rate of displacement and exit, creating nothing more than an unproductive and wasteful local dynamic known as “churn” or “turbulence.”

Source: https://www.jacobinmag.com/2015/11/microcredit-muhammad-yunu...