Critics say that microcredit has not increased incomes, but rather has driven poor households into an obligation trap, in some cases notwithstanding prompting suicide. Moreover, as the access to miniaturized scale loans is widespread, borrowers will in general get several loans from various companies, making it about impossible to pay the obligation back. They include that the money from loans is often used for solid consumer goods or consumption instead of being used for gainful investments, that it fails to enable women, and that it has not enhanced health or education. The effect of microcredit is a subject of much controversy. Proponents state that it reduces poverty through higher work and higher incomes. This is relied upon to prompt enhanced nourishment and enhanced education of the borrowers' children. Some contend that microcredit empowers women. In the US and Canada, it is contended that microcredit helps recipients to move on from welfare programs.
Most criticisms of microfinance have really been criticisms of microcredit. Criticism focuses on the effect on poverty, the dimension of interest rates, high profits, overindebtedness and suicides. Other criticism incorporate the job of foreign donors and working conditions in companies associated to microfinance institutions, especially in Bangladesh.