Microfinance: Development as Freedom (original) (raw)

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.

Explaining microfinance's resilience: the case of microfinance in Australia

Globalisations, 2019

Microfinance has been unsuccessfully deployed as a poverty reduction strategy in the Global South. However, despite advocates acknowledging this shortcoming, the sector continues to grow. Moreover, over the past decade it has expanded its geographic scope, targeting poor communities in the Global North under the banner of financial inclusion. This article investigates the growth of the Australian sector. Analyzing the impacts of reforms to Australia's social security system alongside the political economy of the microfinance industry, it argues the debtfare state in Australia has provided fertile ground for microfinance's expansion. Documenting the advocacy strategies and tools to target vulnerable communities used by microfinance organizations and corporate partners, it charts how government support and subsidies have created a favourable regulatory environment, driving the sector's growth. This has benefitted these coalitions while displacing other forms of social security, despite the lack of robust evidence demonstrating microfinance's benefits for the poor.

Microfinance north and south: contrasting current debates

Journal of International Development, 1998

This paper sets out to examine the apparent consensus around microfinance as a tool to address poverty and social exclusion in North and South. The current emphasis on scale and sustainability in Southern microfinance practice fits the 'counter revolution' in development thought but contrasts with the origins of community banking in the North. The roots of the latter lie in a critique of mainstream economic and financial systems and seeks to re-invent them in ways that bring social, economic and environmental costs and benefits into focus. The role of microfinance in building sustainable livelihoods, both economic and social, is then examined. Finally, it is suggested that, as with any intervention, microfinance has no inherent capability to address gender inequities but must be deliberately made to do so.

Microfinance and the challenge of financial inclusion for development

This article provides a review of the recent literature on microfinance in developing countries and a critical assessment of its effectiveness. It examines the experience of India, which has one of the largest microfinance sectors in the world, and particularly the unfolding of the microfinance crisis in Andhra Pradesh. It concludes that microfinance cannot be seen as a silver bullet for development and that profit-oriented microfinance institutions are problematic. To fulfil even some of its progressive goals, it must be regulated and subsidised, and other strategies for viable financial inclusion of the poor and of small producers must be more actively pursued.

Microfinance: A magic bullet for poverty alleviation and empowerment?

2018

In contemporary times microfinance is promoted by powerful organisations such as the United Nations (UN) and the World Bank as a cutting-edge financial innovation that has the potential to meet certain development ends and goals, including poverty alleviation and women's empowerment. Indeed, the UN officially declared 2005 the International Year of Microfinance. However, research on the impact of microfinance is often conf licting, with certain studies providing evidence of the empowering effects of microfinance, and other studies analysing its disempowering potentials. Such conflicting perspectives challenge the 'magic bullet' notion of microfinance and illustrate the richness of research in this field. In light of these conflicting viewpoints, the purpose of this special issue is to set out a platform for these debates, and to introduce papers appearing in this special issue on microfinance. This is a discussion paper exploring key issues theoretically. The paper finds...

Microfinance: Dreams and Reality

Microfinance is an area of research whose popularity is reflected by the unique potential for wide ranging socioeconomic outcomes which support political goals unmatched by alternative avenues for financial support. However, despite the large amounts of financial resources funding microfinance across the world, and glorious potential economic benefits, there is no consensus regarding the success or failure of microfinance in achieving socioeconomic political goals. This paper examines the empirical literature on microfinance to establish where microfinance has developed from, the organisation of MFI’s, the success or failure of microfinance, and future research methodological possibilities. It has been found that the success or failure of microfinance depends on the benchmarks to which it is measured. From a social empowerment perspective, microfinance success has been observed. However, from an economic development perspective the results are equivocal. The success of microfinance ...

Beyond Lending: How Microfinance Creates New Forms of Capital to Fight Poverty

Innovations: Technology, Governance, Globalization, 2007

The very idea of microfinance has changed banking as we knew it. Providing small loans to the poor, mostly women, replaces physical collateral with collective responsibility. Today, microfinance is an established way to provide financial services to the poor. It can be scaled up in widely different environments around the world, and can deeply benefit the people it serves. It allows the poor both to take advantage of opportunities and to manage their vulnerabilities. The focus of the innovations in microfinance has itself evolved. In the early days of microfinance, the focus was much more "social:" how to form groups in ways that would most effectively enforce collective responsibility? How to motivate women to form their own groups? How to motivate people to save for a period before lending them money? How to respond to negative responses from the better-off and the religious groups in a community? Then, as the focus shifted from social questions, microfinance began to become more professionalized and was scaled up. Soon, innovations related to basic loan management followed. Along with the focus on financial sustainability, innovations in microfinance included better management information systems, and management systems that could increase productivity and internal control. During the middle 1990s, the pendulum began to swing back to the client end, as criticisms of one-size-fits-all types of microcredit gained ground. The initial focus on product innovations in the credit domain was soon followed by a call to expand innovations to a whole range of financial services beyond credit, including savings, insurance, and money transfers. In this article, we focus on a different source of innovations in microfinance: using the process capital of microfinance to design innovations that can address a far wider range of constraints facing the poor. We will also discuss the strategic linkages between microfinance and other approaches that innovators must consciously design into the package if microfinance is to be truly inclusive. To illustrate our argument we provide some examples from Building Resources Across Communities (BRAC) in Bangladesh.

Microfinance: Creating Opportunities for the Poor

Executive Overview Microfinance is an emerging phenomenon that opens access to capital for individuals previously shut out from financial services. In its direct engagement with the poor, microfinance represents a new way for financial capital to potentially stimulate economic growth in developing countries. However, microfinance is poorly understood, and it remains unclear whether it delivers on its promises. The goal of this paper is to introduce the topic of microfinancing to a wider audience of management researchers and to identify opportunities for future research in this new and growing area.

Micro-finance and the Poverty Question: A Historical Perspective

Journal of Insurance and Financial Management, 2017

The pivotal emergence of micro-finance is a function of gross insensitivity of conventional finance sector to reach the overwhelming population of the poor and to assist in the drive to manage poverty. Micro-finance movement has captured the imagination of academics, policymakers, and practitioners in terms of provision of financial means to access credit, and start small businesses, with the potential to enhance community, local and national development. When micro-finance is adequately harnessed and supported, it could scale-up beyond the micro-level as a sustainable part of the process of economic empowerment by which the poor could lift themselves out of poverty. Poverty is a multi-dimensional problem, embedded in a complex and interconnected political, economic, cultural, and ecological system. Owing to poverty's large scope and multiplicity of actors, there is no single guaranteed approach to its management. As a result, solutions are as multifaceted as the causes. Problems and solutions are not isolated phenomena, but occur within an interconnected system in which actors and actions have reciprocal consequences. The greatest contribution of micro-finance is that it empowers people, by providing them with confidence, self-esteem, and the financial means to play a larger role in their development. The potential of micro-finance far exceeds the micro-level, scaling-up to address macro-problems associated with management of poverty.