Microfinance and Dominant Capital

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Microfinance and Dominant Capital

Postby sanha926 » Sun Dec 21, 2008 12:31 pm

The only material I've read on microfinance has been a couple of quite fluffly, uncritical pieces from the likes of Stiglitz and Sachs. But I found an interesting piece in the FT by Tim Harford on the growing tendency towards the corporatization of microfinance in recent years:

http://www.ft.com/cms/s/0/8080c698-c0d2 ... 07658.html

Harford cites a growing rift between 'traditionalists' who want microfinance to be stricty philanthropic, those who want microfinance institutions ran like the large banks they set out to replace in the 1970s, and the majority of people in between 'eager to gain access to capital and commerical expertise, but concerned that competitive market forces may not help the poorest'.

I think this piece is quite telling as it really exposes some of the limits to the microfinance movement. In particular, I found interesting the automatic assertion that continued reliance on philanthropic donations, without access to 'capital', will render the whole movement inefficient (that is, by the standards of capitalist banking). The microfinance movement is essentially being told to commericalize (read capitalize) or die, which is not really a choice at all since capitalization is supposed to go against the very principles on which these institutions were originally founded.

I'd be interested to hear others' thoughts on this issue - as I said this is the first time I've read anything remotely interesting and remotely critical on microfinance. Does anyone know if there's political economy work being done in this area?
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Re: Microfinance and Dominant Capital

Postby dreddly » Sat Dec 27, 2008 11:24 pm

Very good gendered critique of Microcredit/microfinance

Isserles, Robin G “Microcredit: The Rhetoric of Empowerment, the Reality of "Development As Usual" Women's Studies Quarterly; Fall 2003; 31, 3/4;
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Re: Microfinance and Dominant Capital

Postby dtcochrane » Sun Apr 05, 2009 8:51 am

How has microfinance fared through the current crisis?
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Re: Microfinance and Dominant Capital

Postby sanha926 » Mon Apr 06, 2009 5:30 pm

According to this Economist article from a couple of weeks ago, the 30 day delinquency rate on loans has increased from 1.2% pre-crisis to 2-3% now.

http://www.economist.com/finance/displa ... d=13342261

This is still relatively low, and the article claims that the main impact the credit crisis is likely to have is on lenders, not borrowers, since the former are highly dependent on global banks and philanthropy for capital.
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