Ezra's Bookshelf

Due Diligence

by David Roodman ยท 388 pages

David Roodman's Due Diligence is a rigorous examination of whether microfinance, the practice of making small loans to poor people in developing countries, actually helps them escape poverty. Roodman, a researcher at the Center for Global Development, surveys the academic literature and evaluates the quality of evidence for and against microfinance's benefits. He finds that strong claims in either direction outrun the data; most studies suffer from methodological problems that make their conclusions unreliable. Roodman is careful to distinguish between different forms of microfinance and different outcomes (business creation, consumption smoothing, women's empowerment), finding stronger evidence for some than others. The book is also a primer on how to read development research critically, explaining common sources of bias and the difficulty of establishing causal relationships. Due Diligence does not condemn microfinance but argues for modesty in expectations and for better evaluation. Roodman writes clearly enough for non-specialists while maintaining scholarly rigor. Essential reading for anyone involved in development finance, for donors deciding where to give, and for anyone seeking a model of honest, careful thinking about complex social interventions.