Comments on: The real revolution in microfinance

By: jwduke109

jwduke109 — Mon, 25 Oct 2010 14:45:32 +0000

I would go one step further. Not only are we just beginning to understand the complex financial lives of the poor and only now adapting to their needs, what we are seeing is that microfinance has a different impact than was once assumed. The narrative you discuss has people believe that microfinance is a “pull yourself up by your bootstraps” story. The reality is that the impact is much more nuanced. Microfinance loans smooth consumption, so that the person who earns 14 dollars on Monday and nothing the rest of the week can actually live on $2 a day. It is called smoothing consumption, and I have written about it:

http://developeconomies.com/?p=1518
http://developeconomies.com/?p=1206
http://developeconomies.com/?p=1191

By: Gil25Leo

Gil25Leo — Sun, 24 Oct 2010 23:26:32 +0000

In the Philippines, many have cross-membership with various microfinance institutions. That maybe supports the findings that 46% of loans was used to pay off debts.

By: brian1121

brian1121 — Sun, 24 Oct 2010 22:24:43 +0000

I’m currently reviewing Why Microfinance Doesn’t Work for my Communication and Development Theory class. While some of Bateman’s criticisms will be hard to resolve, the desire by some lenders to actively think about what they are doing means there might be hope yet for the industry that Bateman didn’t see.

By: BarbaraKiviat

BarbaraKiviat — Sun, 24 Oct 2010 20:05:23 +0000

@inboulder: The story is that practitioners (not just researchers) are increasingly interested in being able to more deeply understand what services and features clients need– and then doing something about it.

By: FifthDecade

FifthDecade — Sun, 24 Oct 2010 02:53:39 +0000

I don’t think Microfinance works as a business to make profits from, but it can enable and empower the poor, particular women who are poor with families to feed. One charitable microfinance project I saw a documentary about was in India or Africa and lent money to women with children so they had some income independent of their husbands (who frequently drank, smoked or gambled their pay away before it got into the family coffers).

By lending really small amounts, women could then invest in something that gave them an independent income that enabled them to lift their kids out of poverty. The women were found to be more reliable than the men when it came to repaying the loans, and for making better use of the money.

By: bidrec

bidrec — Sat, 23 Oct 2010 17:33:15 +0000

There used to be microfinance in comic books. The American Seed Company of Lancaster, PA advertised in comic books and kids could order seed packets which they would sell to their neighbors and then they would remit some of the money back to the American Seed Company. It went out of business when children stopped sending in the payments after selling the seeds.

Cooperstown Baseball Hall of Fame money is from selling sewing machines on the installment plan. Clark Estates. It wasn’t “micro” in the 19th century.

By: SableSage

SableSage — Sat, 23 Oct 2010 01:32:47 +0000

I often wonder with whom the prototypical “poor person in a poor country” is doing business after they get their microloan. Other poor people, I always assume.

By: inboulder

inboulder — Fri, 22 Oct 2010 22:43:03 +0000

”Research is showing us that we actually don’t know a lot about the customers we serve.” That’s why Compartamos is conducting a 4-year study …

Researcher says we need more research, certainly no reason not to take that at face value…

“In interviews with microfinance recipients in the Philippines, the pair discovered that some 46% of borrowers used a decent chunk of their business loan to pay down other debt and about 28% spent part of the money on a big household purchase—even though fewer than 4% of people in either category ever admitted this to their bank. ”

This sort of finding… is exactly what everyone in the field already knows, what is the story here?

By: ErnieD

ErnieD — Fri, 22 Oct 2010 20:20:39 +0000

We need to export the US model to these places.

Everybody gets a credit card, even if they have no income.

Everybody gets a mortgage, even if they don’t have a house or property.

The micro-financers can then securitize these through US banks who will then pass the securities on to the Fed.