Single correct option
The passage below is followed by four summaries. Choose the option that best captures its essence.
Microfinance was once celebrated as a near-magical solution to global poverty, a way to let the poor lift themselves out of destitution through small, collateral-free loans invested in tiny businesses. Rigorous randomised trials conducted since the early 2000s have complicated this story considerably: access to microcredit does tend to modestly expand small business activity, but it rarely produces the dramatic jumps in household income or consumption that early advocates promised, and in some contexts it has left borrowers with debt burdens they struggle to repay. The technology is neither useless nor miraculous; it is one modest tool among many for expanding poor households' financial options.
Microfinance was once celebrated as a near-magical solution to global poverty, a way to let the poor lift themselves out of destitution through small, collateral-free loans invested in tiny businesses. Rigorous randomised trials conducted since the early 2000s have complicated this story considerably: access to microcredit does tend to modestly expand small business activity, but it rarely produces the dramatic jumps in household income or consumption that early advocates promised, and in some contexts it has left borrowers with debt burdens they struggle to repay. The technology is neither useless nor miraculous; it is one modest tool among many for expanding poor households' financial options.
- A. Microfinance has been proven an outright failure and should be discontinued worldwide
- B. Randomised trials show microcredit produces dramatic income growth for nearly all borrowers
- C. Evidence shows microcredit has modest, mixed effects, falling well short of its early billing as a poverty-elimination miracle
- D. Microfinance institutions have been accused of predatory lending practices in most developing countries
Show answer and solution
Answer: (C) Evidence shows microcredit has modest, mixed effects, falling well short of its early billing as a poverty-elimination miracle
The passage's core movement is from initial over-optimism ("near-magical solution") to a more tempered, evidence-based view: modest gains in business activity, no dramatic income jumps, occasional debt burden, and a closing verdict that it is "neither useless nor miraculous." Option C captures this balanced, evidence-based downgrading of expectations. A and B are overstatements in opposite directions; D introduces a claim ("most developing countries", predatory lending) not made in the passage.
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