Avoiding the perils and fulfilling the promises of microfinance: A closer examination of the educational outcomes of clients’ children in Nicaragua

Many microfinance advocates claim that micro-credit has a positive effect on the educational outcomes of the children of micro-credit borrowers, and that these educational improvements provide us with evidence that micro-credit institutions are serving the social function for which they have been designed. This paper draws attention to this area of microfinance-impact research, and explores the promises and perils associated with the impact of microfinance on children's educational outcomes. The goal of this discussion is to ensure that the pervasive spread of microfinance to all parts of the globe is accompanied by benefits to children's educational outcomes. Drawing on the research we conducted in Nicaragua in 2008, we, the joint authors of this paper share insights that we hope can help to upgrade the practices currently being employed by both microfinancers and children's educational institutions, and to thereby strengthen academic-credit linkages within client households.