I remember that in 2004, in preparation for the UN International Year of Microcredit , I was scouting for good case studies demonstrating how microfinance can help achieve the Millenium Development Goals. There were many hundreds of great stories, and some of the best ones demonstrated how microfinance can improve livelihoods and the local ecosystem at the same time, like this credit cooperative in the mountains of Thailand I wrote about.

But despite an abundance of this kind of anecdotal evidence, there is relatively little empirical evaluation, or critical analysis about the actual transformative impact of microfinance. So while there’s no doubt that the approach is an impressive and positive market-based innovation, it’s about time some questions were raised about its real impact: when, where, how, and for whom is it most effective?

This month’s cover of the Stanford Social Innovation review says, “Microfinance misses the mark” arguing that microfinance doesn’t lift people out of poverty, but that stable jobs do. Accordingly, if societies want to help the poorest of the poor, they should support large, labor-intensive industries. The author, Aneel Karnani, an associate professor at the University of Michigan’s Ross School of Business, picks holes in common perception:

Microloans are not beneficial to the poorest of the poor because they are not in a position to take risks. This group tend to take out conservative loans and rarely invest in new technology, fixed capital or hiring labour, and therefore don’t see much of an increase in income.

Most microenterprises remain very small. They don’t build up the staff, assets, or efficiency gains that would enable growth and drive the ‘flourishing economies’ predicted by the UN and other agencies.

Despite having more access to capital, women cannot overcome the ingrained patriarchal systems of control. So most female microentrepreneurs do not actually have control over the loans contracted or income generated.

At a time when the Nobel Peace Prize has been awarded to a microfinance institution and its founder, modern foundations like Omidyar Network are investing $millions, large commercial banks like Barclays and Citigroup are diving in, and innovative start-ups like Kiva are taking microfinance to the people, I hope to hear some ruffled feathers, serious debate and further research.