Held up for decades as something of a "miracle cure" for global poverty,microfinance became one of the world's most high-profile and generously funded development interventions. Everyone, it seemed, was talking about how small loans could unlock endless opportunities for the world's poorest people.
By 2010, however, microfinance was in crisis. New studies began to challenge the promise of microfinance to bring about an unprecedented reduction in poverty. Crisis in rapidly growing microcredit industries prompted parallels with the US subprime mortgage collapse. Reports of skyrocketing interest rates and suicides among indebted borrowers in Andhra Pradesh, India, suggested a sinister side to the microcredit boom. Suddenly, the story wasn't so simple.
Even an episode of The Simpsons featuring microfinance told a confusing tale. First, iconic do-gooder Lisa Simpson gleefully lends $50 to the school bully through the fictional Metamorphosis Microfinance and watches as his small business blooms. But his success is shortlived and his budding enterprise soon collapses. Lisa is perplexed: "It didn't go the way I expected."