The Macroeconomics of Microfinance

Over the past several decades, microfinance—i.e., credit targeted toward small-scale entrepreneurial activities of the poor who may otherwise lack access to financing—has become a pillar of economic development policies. In recent years, there has been a concerted effort to expand such programs with the goal of alleviating poverty and promoting development.1 Between 1997 and 2006, access to microfinance grew by up to 29 percent a year, reaching a scale at which macroeconomic considerations become relevant.