Or the more things change, the more they stay the same... Sometimes it seems as though there is no shortage of proverbs when it comes to looking at the seemingly inevitable credit business cycle. In my last blog I took a look at the unprecedented stability of the US banking sector during the 50 years following the Great Depression.
Recently, I was reading the Economist and came across Charles Keating's obituary. That name means little to most readers outside the US, but for me it reminded of an idea that's been percolating in my mind for quite some time now: while rich countries offer valuable lessons for microfinance regulation, those lessons alone won't be enough.
A recent article by the Economist hails a study in Bangladesh by Shahidur Khandker as "the biggest study so far [which] finds that microcredit helps the poor after all." Within the sector, the article has been widely circulated as proof that, indeed, microfinance does work.
As the microfinance industry has grown, there has been an increasing focus on the non-financial impacts that microfinance institutions (MFIs) can have. While the industry developed to tackle socio-economic issues through providing access to finance, its impressive growth led to increasing evaluation of MFIs potential social and environmental impacts. As a result, MFIs are increasingly expected to consider a broader spectrum of issues in their operations.
For years, credit was the driving force behind microfinance. But times have changed. Instead of credit, we now speak of financial inclusion and expanding access to savings stands as one of the topmost objectives for the sector.
Every November, the European Microfinance Week (EMW) brings together a high-level group of decision-makers, opinion-leaders and practitioners from the microfinance industry to discuss the state of the sector and the way ahead in the coming years. This past November, the e-MFP team went one step further, and conducted a poll of attendees on the key trends affecting the sector and its level of preparedness to address them.
This part II of a two-post blog, summarizing some of the key findings of an edited volume that has just been released (Guérin I. Morvant-Roux S. Villarreal M. (eds) (2013) Microfinance, debt and over-indebtedness: Juggling with money, London: Routledge). More details about the book can be found here. Other project publications may be found at microfinance-in-crisis.org.
NpM, Platform for Inclusive Finance is a Dutch membership organisation focusing on the promotion of inclusive finance. What the member organisations have in common is their contribution to assisting the poor in getting access to finance.
This is part I of a two-part blog, summarizing some of the key findings of an edited volume that has just been released (Guérin I. Morvant-Roux S. Villarreal M. (eds) (2013) Microfinance, debt and over-indebtedness: Juggling with money, London: Routledge).
It’s a question that comes up at nearly dinner discussion of microfinance: why are the interest rates so high, and how can poor clients afford them? So, you have the answer – interest rates are high because operating in difficult environments is costly, and because those costs have to be recouped from small loans.