Wednesday May 18th
- Grameen Bank revolutionized microfinance but did not invent it.
- Banking in developing countries during colonialism was really only
available to the elite, which was the minority.
- John Murdock – the economics of microfinance – states are really bad at
doing microfinance: corrupt, patronage, unprofessional highly subsidized,
- Replacement of collateral with social collateral/networks - Reliance on peer
dynamics. People would come together to get a loan as a group using their
social cohesion/capital to make up for the lack of assets.
- Supported by both sides of the political spectrum for different reasons.
- IFI’s came into these different countries and prescribed SAP’s
-1990’s, donors started pressuring for Neoliberal policies in Microfinance:
recover costs, make it sustainable, make it profitable. Commercialization.
- Started off with low interest rates to help the poor, but became tasked with
becoming sustainable and profitable.
Best Practice: recover costs and pay for your services in time.
- Evolution of Microcredit and the dovetailing with the politics of the time.
Micro-credit – Microfinance
Shift in the industry to expand microcredit to microfinance. Micro is where
you make money because you can charge and interest rate. In some countries
taking deposits is illegal if you’re not a registered bank.
Microfinance: is the provision of financial services (such as credit, insurance,
savings and remittances at the micro level to the poor.
Remittances: When migrant workers send their money back home.
1 Requirements – Written Assignments:
2-3 Pages double spaced, post on blackboard before 9pm day before it is due
6 Citations – used suggested readings (Bateman book counts)
10% Proposal for your major paper, will be marked hard.
Find an institution that does MF and evaluate it.