The Financialization of Poverty (original) (raw)
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The financialisation of poverty
Human Rights Documents Online
This book helps to understand the enigmatic microfinance sector by tracing its evolution and asking how it works as a financial system. Our present capitalism is a financialized capitalism, and microfinance is its response to poverty. Microfinance has broadranging effects, reaching hundreds of millions of people and generating substantial revenues. Although systemic flaws have become obvious, most strikingly with the 2010 Indian crisis that was marked by overindebtedness, suicides and violence, the industry's expansion continues unabated. As Philip Mader argues, microfinance heralds less the end of poverty than new, more financialized forms of poverty. While microfinance promises to empower, it generates discipline and extracts substantial resources from the poor, producing new crises and new forms of dispossession. Version: Author's own version of their pre-copy-edited contribution.
Economic Research-Ekonomska Istraživanja, 2013
Microfinance serves as a key case for studying the effects of financial systems. As a development intervention deeply intertwined with processes of financialisation, we study the expansion and workings of microfinance on three dimensions. First, microfinance's appeal is built on positive mobilising narratives which present poverty as a problem of finance, and portray it as superior solution relative to charity or other redistributive alternatives. Second, microfinance as a financial system exerts a governmentality which works through technologies of the selffor disciplinary individuals to uphold regularity in capital flows. Third, in this way microfinance makes possible the extraction of surplus value from its poor borrowers, who may not have much choice, at a considerable scale. We conclude that these three dimensions help to explain the ways in which financial systems overall operate and expand. Reference to this paper should be made as follows: Mader P. 2013. Explaining and quantifiying the extractive success of financial systems: microfinance and the financialisation of poverty. Ekonomska istraživanja-Economic Research Special Issue 2013
The Antinomies of Financial Inclusion: Debt, Distress and the Workings of Indian Microfinance
The concept of ‘financial inclusion’ has become a central trope that legitimates a wide range of contemporary development practices. By constructing a new object of development – the ‘financially excluded’ – it facilitates the expansion of an increasingly corporatized microfinance technocracy. The present paper problematizes the underlying binaries of inclusion/ exclusion and formal/informal finance upon which this narrative is based. Through an examination of the 2010 Andhra Pradesh microfinance crisis, it demonstrates key contradictions within the discourse and practices of commercial microfinance. In so doing, it demonstrates why the narrative of financial inclusion and its correlate notion of ‘consumption smoothing’ are inadequate tools with which to conceptualize the political economy of contemporary agrarian change.
Microfinance and development finance in India: research implications
2010
This paper appraises options for research relating to microfinance in India, doing so in the broad context of rival macro pressures to accelerate economic growth, maintain political order, reduce poverty and adapt to climate change. This paper first set out a general well-being regime framework that can be used for this analysis and sketch the role microfinance plays within it. Section 2 uses it to inform a brief historical discussion of the evolution of microfinance in India. Section 3 develops the analysis further by considering possible effects of three external drivers of change: rising political aspirations; climate change and food insecurity; and new information and communication technology (ICT). Section 4 uses these examples to discuss methodological options for policy-relevant empirical research. It also suggests that microfinance is an important arena for exploring empirically the tension inherent in the idea of development management.
Reaching the Unreachable Through Microfinance: Challenges Before India
2012
It is also widely accepted that poverty and hunger arise not because there are no goods or food, but because billions of people lack income to purchase them (Chatterjee, 2009). Although the Indian economy has grown steadily over the last two decades, its growth has been uneven when comparing different social groups, economic groups, geographic regions, and rural and urban areas. Through this paper the author tries to make a humble effort to give a vivid picture of what has been done for inclusive development through the framework of microfinance in India. This section of people have been reported to have very little access to finances, timely access too is another constraint. Microfinance has been one of the most innovative as well as challenging measures for policy makers as well as implementers. This study will be a systemic review of available authentic documents to understand the existing framework of microfinance in India and its challenges.
Microfinance and the dynamics of financial vulnerability. Lessons from rural South India
2009
Drawing on data collected in rural South India, and using mainly a comprehensive approach, the purpose of this paper is to analyse the effects of microfinance on the financial vulnerability of its clients. First, we observe that microfinance is a double-edged sword: it can either reduce the financial vulnerability of households or push them further into debt.Second, we argue that an understanding of the uses and processes of microfinance is inseparable from one of the broader local dynamics pertaining to employment, financing and consumption. We also argue that the effects of microfinance depend upon how clients articulate and coordinate microfinance with the other financial tools to which they have access and the whole range of strategies deployed to cope with vulnerability and to build assets, both tangible and intangible.(Resume d'auteur)
Microfinance Studies: Introduction and Overview
Oxford Development Studies, 2013
Microfinance (MF) has grown over the last two decades into an important sub-field of development studies. This special issue of Oxford Development Studies explores the contributions of MF, drawing particularly on research conducted in India. After a brief overview of the emergence of MF as a research field, this introduction develops three themes. First, we argue that MF interventions generally involve, and assume a process of transformation of, financially excluded people and groups who are not fully dominated by the logic of market exchange but have histories, culture, social relationships and politics structured by other kinds of authority and dynamics. Second, we argue that understanding MF interventions at the local level requires the social and political analysis of global development architecture, while MF may also play a role in consolidating or cementing global political economy at its base. Third, we argue that MF interventions have provided fertile ground for research into the causes and consequences of poverty. The introduction ends with summaries of the contents of the special issue.
Paradigm Paranoia or Mission Drift? Lessons From Microfinance Crisis in India
2018
Globally, microfinance industry is said to be at the tipping point thanks to crisis originating from India, particularly the state of Andhra Pradesh. The crisis manifested through the suicides of the borrowers who allegedly were lured into excessive borrowing and subsequently, pushed into usurious debt-servicing by the microfinance institutions. The hard selling of the debt and questionable debt recovery practices are attributed to the drift towards profit-seeking micro-lending as against the avowed mission of serving the poor. With the help of case study of SKS, the article attempts to examine the incidence and impact of mission drift in microfinance. It , then, puts it in the broader context of the neoliberal paradigm that paranoically upholds that the markets by themselves are capable of attaining the developmental goals, including alleviation of poverty. The article highlights the tyranny of markets with the help of two more instances since SKS, viz., Sahara and Sardha. On the b...
Doing business with the poor: the rules and impact of the microfinance institutions
Economic Research-Ekonomska Istraživanja, 2017
Of the total global population, at least 14.5% are living on less than $1.25 a day, 34% of the females in the least developed countries are unable to complete their primary education, and some 805 million are believed to be food insecure. To bring these numbers into accordance with the Millennium Development Goals, there are at least a dozen of different programmes operating around the world. Microcredit, being one of those programmes, is considered superior to the rest for being the only participatory approach and for being general enough to cater for a number of policy interventions. Microcredit or credit to the poor is provided under two very different mechanisms; the welfarist mechanism and the institutionalist mechanism. Each of these mechanisms has its advocates, as well as, its critics. The current paper empirically evaluates the two approaches in a systematic way. By using purposively collected data from the North West Pakistan and vigorous methodologies, we show that commercialization of microfinance institutions has indeed shifted the focus from either poverty reduction or women's empowerment. Instead, the focus is now on more secure and profitable advances. Moreover, we also show that the welfarist approach in eradicating poverty and empowering women is superior to the now popular financial system approach.
Towards a plural history of microfinance
Canadian Journal of Development Studies / Revue canadienne d'études du développement, 2016
This paper is concerned with the recent history of microfinance, both for itself and as a case study of the evolution of development ideas and activities. Doing justice to this history, and to all those involved in it will not be easy. Rather than aiming for a full narrative this paper asks what kinds of histories might be told, and with what evidence. The paper contrasts two dominant but oppositional narratives: a mainstream account rooted in neo-classical economics that has applauded the successes of microfinance in expanding financial market opportunities; and a political economy critique that highlights new opportunities for exploitation. We illustrate the differences with particular reference to recent developments in India, before turning to the potential for a more inductive and plural account. A more plural history of microfinance emphasises geographical variation in the expansion of financial services, the influence of prior social relations among users, the organisational culture of suppliers and the political economy of regulation. It is also consistent with the variability and contestability of available empirical evidence about the impact of microfinance over space and time. We illustrate this by drawing on a selection of doctoral research studies, and conclude by cautioning against universal narratives of either successful financial inclusion or adverse incorporation.