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Expectations are high, but evidence of the impact of microcredit remains in short supply. This article estimates the impact of an urban credit programme in Zambia on business performance and on a range of indicators of wellbeing. Borrowers who obtained a second loan experienced significantly higher average growth in business profits and household income. Inflexible group enforcement of loan obligations resulted in some borrowers, especially amongst those who had taken only one loan, being made worse off. Our methodological investigations suggest that the supply of rigorous impact studies can be increased by basing them on data collection that serves a wider range of purposes, including market research.Microcredit, Urban Credit Programme, Household Incomes, Business Profits, Zambia,

While much research has addressed the impact of microcredit on poverty, less attention has been paid to inequality. This paper draws on research on the Zambian Copperbelt to show how impact on income distribution depends upon who obtains loans, who graduates to larger loans, who exits and group dynamics. Some initial levelling up of business income was found, but the more marked overall effect among borrowers was of income polarisation. To gain a full picture, more research is needed into the wider impact of the big gainers not only on their competitors, customers and employees, but also on political tolerance of inequality. Copyright © 2002 John Wiley & Sons, Ltd.

Many microfinance institutions claim to be oriented to a double bottom line, but while methods of financial performance assessment are widely agreed the same cannot be said about social performance. Monitoring social performance is most useful when it reveals variation in both outreach and impact over time and between clients. Data from a village banking programme in Peru is used to compare two methods for assessing each. On poverty outreach, we favour monitoring of proxy indicators for clients against national household survey data, and on impact we recommend making more use of individual in‐depth interviews.

This article links primary research into the way subjective well‐being among poor people can be defined and measured to the growing literature on poverty as a failure of capacity to aspire. Data from Bangladesh, Thailand and Peru are used to illustrate a measurement strategy based on defining well‐being as a function of the gap between individuals’ diverse and multiple aspirations, and their satisfaction with achieving them. Such analysis has the potential to illuminate variation in individual and local capacity to respond to different development opportunities. It also warns against the limitations of treating aspirations as a single rather than a multidimensional concept.