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We assume $285 to be the average loan to each new borrower. Microfinance programs are costly and typically require extensive subsidies. Based on a number of studies, we assume that each dollar loaned per year will increase household expenditures by about 10 percent in the first year, and that benefits will continue to accrue annually by about 1 percent for an average 30 year lifespan of the borrower. Bringing together these assumptions, the benefit-cost ratio is around 3.2.
Read reason Science Correspondent Ronald Bailey's dispatches from the Copenhagen Consensus Conference 2008 here.
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