Today is Thursday, February 22nd, and this is the Cato Daily Podcast. I'm your host Anastasia Glova.

For today's podcast, I'm on the film with Thomas Dictor, author of the newly released Cato Study,

A Second Look at Microffinance the sequence of growth

and credit in economic history. Tom has worked at international development in a variety

of institutions including the World Bank, the United Nations Development Program, and the Peace

Corps.

His experiences lead him to conclude that microfinance isn't everything that noble laureate and

founder of Grameen Bank, Mohammed Eunus imagines it to be.

Why the pessimistic outlook on the benefits of microfinance?

Well, first of all, we're really short on solid evidence.

The evidence that we have the most of is anecdotal and lots of stories

and lots of pictures. We don't have serious, rigorous impact analysis data. We don't have long-term follow-up data on what happens to the people who take microcredit loans.

We are short on sustainability. There are thousands and thousands

of MFI's, microfinance institutions in existence and an amazingly small percentage of those

thousands are financially sustainable. We're perhaps talking about a handful or two

handful of institutions that really cover their costs and the costs of

their funds.

And I guess the last reason that I have a pessimistic outlook is that I've seen a growing amount of hype around

this field, which is bringing in newer and newer and more and more players, more and more outside interest, more and more public interest,

more and more journalistic interest.

This is pushing the expectations of microcredit in particular and I think the potential for

causing some damage is growing.

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