POLI 227 Lecture Notes - Lecture 22: Microcredit, The Economic Journal, Low Technology
4 Sep 2016
School
Department
Course
Professor
Microcredit
• Is it effective?
o Trying to change the traditional role of women society by increasing production
in the economy and society based on women
o Does it lead to social change and sustainable development?
The Evidence
• Bangladesh still a low-income country, most micro-credits in effect in any country
• Impact not as clear as expected
• American Economic Journal (Jan 2015)
o Reviewed 6 randomized controlled trials (Bosnia, Ethiopia, India, Mexico,
Mongolia, Morocco)
• Findings:
o Increased access to credit in 6/6 studies
o Increased business activity in 5/6
o Significant increase in household income 0/6
o Consumption
▪ Significant increase in 1/6
▪ No change 3/6
▪ Significant decrease in 2/6
▪ Significant social effects in 1/6
• Why?
o Limited culture change
▪ Instead of empowering women, women were the means to an end
▪ Women becoming loan repayers whose use is still controlled by men
▪ Context alters reality
o Too much to expect? -- small amount of money in vastly underdeveloped
countries, aggregating micro projects
▪ Low income
▪ Low technology
▪ Few employment opportunities
▪ Lack of scaling up
o Weak state institutions
▪ States so small they can't establish interest, rule of law, violence
o The point is not to dismiss microcredit out of hand, but to place is impact in the
perspective of achieving sustainable development
The importance of Gender
• Maximizing economic potential is important to achieve sustainable development and
improve people's lives – treat half the working force fairly and equitably
• Building the kinds of societies we want
o Just, inclusionary
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