Effect of Microfinance on Poor Rural Households and the Status of Women

Evaluation Document | 30 September 2007

This evaluation assesses the extent to which access to microfinance has reduced the poverty of rural poor households and improved the socioeconomic status of poor women based on the experience of ADB-supported projects.

The Microfinance Development Strategy of ADB, approved in 2000, was formulated to support the development of high quality, sustainable microfinance services to poor and low-income households and their microenterprises. Since the release of the strategy, projects with greater focus on microfinance and on women have been initiated, and some projects that were then ongoing have already reached completion. This study was undertaken to assess based on the experience of ADB-supported projects, the extent to which access to microfinance has reduced the poverty of rural poor households and improved the socioeconomic status of poor women.

The projects selected for in-depth review in this study were: (i) the Rural Microenterprise Finance Project in the Philippines; (ii) Participatory Livestock Development Project in Bangladesh; (iii) Second Participatory Livestock Development Project in Bangladesh; (iv) Rural Livelihood Project in Bangladesh; and (v) the Small and Microfinance Development Project in Uzbekistan.

As the Operations Evaluation Department's first rigorous impact assessment, an extensive survey was conducted on the Philippine microcredit project. Results showed that the project had had a significant impact on the number of microenterprises and the number of persons employed in them, reflecting the project's design to cater to the entrepreneurial poor. The focus group discussions in the three countries indicate that the microfinance projects had positive effects on the status of women, particularly in the household. The five projects, to a large extent, mainstreamed improving the status of women in their design and implementation.

Lessons identified

  • The characteristics and mandate of participating microfinance institutions have important bearings on targeting poor households. The institutional orientation of the institution or NGO needs to match the development goal in project designs.
  • Planning to reach large numbers of the ultra poor with microfinance alone may not be a realistic objective. Special programs may be needed to provide the ultra poor with a range of services, covering training, health provision, and more general social development for the disadvantaged, as well as grants of assets or credits.
  • It is useful to include a gender action plan in the design of microfinance projects, which may include features to increase women's participation in, and access to, benefits of the microfinance projects.
  • Involving gender specialists in project design, implementation, monitoring, and evaluation to help ensure better integration of gender/women's concerns in the project components.


Drawing on evaluation findings, microfinance projects need to:

  • reexamine targeting approaches and mechanisms;
  • adopt a more focused and deliberate approach in targeting;
  • use internationally accepted guidelines and principles for the design of microfinance projects;
  • build staff technical capacity in microfinance; and
  • include plans for rigorous impact evaluations during the formulation of selected microfinance projects.


  • Executive Summary
  • I. Introduction
  • II. Objectives and Scope
  • III. Description of Selected Projects
  • IV. Literature Review of Studies Assessing the Impact of Microfinance
  • V. Framework for Assessing Impact on Households
  • VI. Methodology
  • VII. Findings of the Study
  • VIII. Lessons and Recommendations
  • Appendixes
  • Supplementary Appendixes