POL300H1 Lecture : May 18th
Document Summary
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, inefficient. 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. 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.
