For too long, policymakers, economists, and investors have focused on whether microfinance actually helps people, reducing a complex issue to a meaningless yes-or-no verdict. The most important questions concern how loans are designed, delivered, and regulated, who receives them, and what they are used for.

LISBON/WASHINGTON, DC—Over the past five decades, microfinance has grown into a $1.5 trillion global industry, reaching hundreds of millions of households that conventional banks have never served and likely never would. It has enabled unbanked people around the world to start businesses, build assets, keep children in school, and withstand shocks that might otherwise have been devastating.