The microfinance industry grew more exponentially over the past 20 years under the premise that expanding access to credit for entrepreneurial activities helps improve the welfare of the poor. With some microfinance institutions (MFIs) now moving beyond entrepreneurial credit and offering consumer loans, practitioners and policymakers have expressed concern that the poor may be harmed by costly interest payments on loans that do not directly enhance income generation.BASIS CSRP designed and conducted a field experiment in South Africa to determine the impact of consumer credit on marginal groups. They also looked into whether lenders are pursuing optimal, profit-maximizing lending strategies.
