Micro and small enterprises (MSEs) are a vital part of the livelihoods and resilience strategies of poor households across emerging markets. There is evidence that lack of access to finance is one of the several binding constraints that limit MSEs’ potential. Even so, the impacts of MSE finance are not comprehensively understood. This deck reviews existing impact literature and identifies key knowledge gaps: evidence base shows that the impacts of finance on MSEs are often small and inconclusive; borrower mindset, gender and loan characteristics influence impacts of finance; and impacts may be hiding between the many gaps in today’s evidence base.
Over the past decade, it has become increasingly clear that when an MSE leverages financing to turbocharge its growth and increase profitability, it is the exception, not the rule.
The debate over the impact of small business finance is far from settled. Here are four gaps in the evidence base that should be filled to move the debate forward.