Thought for the Day

[bcholmes]

Held up for decades as something of a “miracle cure” for global poverty, microfinance became one of the world’s most high-profile and generously funded development interventions. Everyone, it seemed, was talking about how small loans could unlock endless opportunities for the world’s poorest people.

By 2010, however, microfinance was in crisis. New studies began to challenge the promise of microfinance to bring about an unprecedented reduction in poverty. Crisis in rapidly growing microcredit industries prompted parallels with the US subprime mortgage collapse. Reports of skyrocketing interest rates and suicides among indebted borrowers in Andhra Pradesh, India, suggested a sinister side to the microcredit boom. Suddenly, the story wasn’t so simple.

– Claire Provost, “The rise and fall of microfinance”, The Guardian

Hm. I wonder if the cited studies make any distinction between microcredit as it’s offered by groups like Grameen versus microcredit offered by traditional banks. Must learn more.

Mirrored from Under the Beret.

Comments

[wild_irises]

Let us know if you learn more. Most of my microcredit exposure is through Kiva, which seems to be both doing well and doing good, and has felt that way throughout the economic crises of the last five years.