microcredit

Geek Heresy: Rescuing Social Change From the Cult of Technology

by Kentaro Toyama  · 25 May 2015  · 494pp  · 116,739 words

into a titan of social programs. It was boosted by the tireless evangelism of advocates like Yunus, who has said that “the purpose of microcredit is to eliminate poverty in the shortest possible time frame.”3 According to proponents, loans allow households to apply existing skills to build up small

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businesses – microenterprises – and climb out of poverty on their own. Microcredit is supposed to increase incomes, empower women, and enhance health and education outcomes for children. It’s been said that lives are “transformed by microfinance

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not seen as a money-making opportunity.”8 Profits might be forgivable if borrowers always benefited. Recent research, though, tempers microlending hype. For one thing, microcredit is usually just one of many credit options. One insightful set of studies based on financial diaries of households in Bangladesh, India, and South Africa

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These results caused a commotion in the world of microfinance. They disputed the claims of revolutionary, life-transforming outcomes. The findings on the whole favored microcredit, but not overwhelmingly, and they were interpreted as lukewarm. Another group of researchers who found similar results put a provocative question mark in their paper

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middle-class stories and accusations that the investigators only looked at short-term impacts. For now, something of a truce prevails. Both sides agree that microcredit can be helpful, that the more extreme claims are overblown, and that more research is needed. An Economic Trojan Horse? Credit can be good

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of its borrowers are undoubtedly benefiting. But which ones? A closer look at the economists’ data shows that positive effects tend to favor certain subgroups. Microcredit is more beneficial for those with greater wealth and education; for those with existing businesses; and for those with entrepreneurial skills and temperament; and,

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loan payments and apply peer pressure to ensure that individual members pay. By bundling a method of small-scale loan-making into a standard package, microcredit is like a technology.19 As a packaged intervention, it has spread far and wide. Its reach, though, outpaces its positive impact. When microloans

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as Oxfam and Heifer International asking you to donate a goat – great as food and fertilizer source for a poor farming family. But, as with microcredit, packaged interventions aren’t limited to physical goods. They can be abstract ideas or institutional structures: school vouchers, charter schools, home mortgages, elections. Elections

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the people who create technologies, devise policies, supply funds, or otherwise influence the design of an intervention. Few dispute the critical role of leadership. In microcredit, for example, it matters greatly whether those in power – microfinance institution heads, policymakers, investors, and so on – are committed to supporting low-income borrowers.

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overeager intention to serve more people – to supersede that commitment, the impact will sour. As Yunus noted, when growth became the chief goal of microcredit, “banks needed to raise interest rates and engage in aggressive marketing and loan collection. The kind of empathy that had once been shown toward borrowers

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can be a poverty alleviation tool,” he said. “We’re not out to prove that.”30 Implementers are the second vital group. Consider again microcredit, whose methodology leaves little room for error. It’s not easy to make small loans to poor borrowers. They have no formal collateral. Borrowers

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because this process is too costly for formal banks; they can’t work directly with very poor borrowers without losing money. When it works, microcredit is a marvel of implementation that combines a high-precision process with compassion for borrowers. Implementers are the individuals and institutions who execute a packaged

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capital.”42 Yunus isn’t the only one. Here is John Hatch, founder of the nonprofit Foundation for International Community Assistance, describing his philosophy of microcredit: “Give poor communities the opportunity, and then get out of the way!”43 Kiva.org, an online portal where individuals can contribute to loan

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asserts, “Low-income individuals are capable of lifting themselves out of poverty if given access to financial services.”44 Opportunity International, another large microcredit organization, says simply that microcredit is “a solution to global poverty.”45 The people making these claims, though, contradict their public statements in their own work. When I

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be an oasis of democracy if an election were enough to cause good governance. Of course, technologies can enrich lives; voting can empower citizens; and microcredit can lead to better livelihoods. But “can” is not always “will.” Modern society fetishizes technocratic devices, but it’s a human finger on the

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of the chef that matters. Similarly, television can be a part of a good education, but only with wise teachers directing their use.18 Microcredit can alleviate poverty, but only with wise institutions melding efficiency and compassion.19 Elections can yield a responsive government, but only with wise citizens ready

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and connect the SHGs to relevant institutions. According to Choudhury: [Pradan first provided] training about how SHGs work. We walked them through savings programs and microcredit. We explained their legal rights and entitlements. Then, we discussed social evils like witchcraft, alcoholism, and domestic violence. A few select SHG members, including

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organization called SKS Microfinance repeated Compartamos’s feat in India, raising $358 million in its IPO, and setting off a national debate that crippled the microcredit industry in that country. Many accused SKS and other microfinance institutions of pushing loans too aggressively. Vijay Mahajan, an elder statesman of microfinance in

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, randomly selected from a larger pool of 104 poor, urban neighborhoods in Hyderabad. Fifteen to 18 months after the branch openings, the neighborhoods where microcredit was available didn’t appear on the whole to be wealthier than those without. Nor were there detectable changes in overall household spending, women’s

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goods per person per month, and a 23-cent decrease in perishable consumer goods – durable goods being more likely to support businesses. Their conclusion? “Microcredit therefore may not be the miracle that is sometimes claimed on its behalf, but it does allow households to borrow, invest, and create and expand

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.Based on data available at MixMarket (2014). The estimate is low because it includes only organizations registered with the exchange at the time and excludes microcredit activities in the developed world. 48.Heeks (2009). 49.Organisation for Economic Co-operation and Development (OECD) (2014a). The figure cited includes all bilateral

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ted.com/2009/06/16/qa_with_clay_sh/. Angelucci, Manuela, Dean Karlan, and Jonathan Zinman. (2013). Win some lose some? Evidence from a randomized microcredit program placement experiment by Compartamos Banco. National Bureau of Economic Research Working Paper No. 19119, www.nber.org/papers/w19119. Apostle, Hippocrates G. (1984).

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: Using randomized supply decisions to estimate the impacts. Review of Financial Studies 23:433–464, http://rfs.oxfordjournals.org/content/23/1/433. ———. (2011). Microcredit in theory and practice: Using randomized credit scoring for impact evaluation. Science 332(6035):1278–1284, www.sciencemag.org/content/332/6035/1278.long. Karnani

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-limits-of-technology/2012/05/08/gIQApp8YAU_blog.html. Plutarch. (1992). Essays. Robin Waterfield, trans. Penguin Classics. Polgreen, Lydia, and Vikas Bajaj. (2010). India microcredit faces collapse from defaults. New York Times, Nov. 17, 2010, www.nytimes.com/2010/11/18/world/asia/18micro.html. Population Research Institute. (1998). Fact

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. In Proceedings of the Eighth International Conference on Computer Vision 2:50–57, http://dx.doi.org/10.1109/ICCV.2001.937599. Tripathi, Salil. (2006). Microcredit won’t make poverty history. The Guardian, Oct. 17, 2006, www.theguardian.com/business/2006/oct/17/businesscomment.internationalaidanddevelopment. Tsotsis, Alexia. (2011). To celebrate

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Micro-Lending and the Battle Against World Poverty. PublicAffairs. ———. (2007). Creating a World Without Poverty: Social Business and the Future of Capitalism. PublicAffairs. ———. (2011). Sacrificing microcredit for megaprofits. New York Times, Jan. 14, 2011, www.nytimes.com/2011/01/15/opinion/15yunus.html. Zachary, Lois J. (2012). The Mentor’s Guide

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, 29 inequality, 63–64 interpersonal communications, 46–47 knowledge management and personnel management, 45 latent desires and behaviors, 40–42 law and policy, 63–64 microcredit, 57–61, 66–68, 71–72 music, 38–40 packaged interventions, 57–73, 116, 273–274(n25) politics and governance, 23, 31–37, 46

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also Caste system Bahrain: Arab Spring, 34, 37 Bain Capital, 85–86 Bales, Kevin, 166–167 Banerjee, Abhijit, 68, 236–237(n14) Banking sector. See Microcredit Barnes & Noble, 75–77 Bauerlein, Mark, 10 Baumeister, Roy, 132, 251–252(n15) Behar, Anurag, 8 Behavior change, manipulative nature of, 161, 197 Behavioral

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, 44–46 marketing personal music, 39 social enterprise, 84–87 telecenters and Internet cafés, 19, 105, 246–247(n8) Walkman, 38–40 See also Economics; Microcredit; Nonprofit organizations Cairncross, Frances, 46 Cambodia: One Laptop Per Child, 15 Cameron, David, 89 Capacity building, 124 Digital Green, 108–109, 206 health care,

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266(n7) Consequentialist virtue ethics, 213–214, 274–275(n4) Consumer culture, 96–97, 177–178 Consumption capacity, 82–84 Consumption smoothing, 59. See also Microcredit Contextualists, technological, 20–21, 24 Actor-Network Theory, 231(n23) defining, 24 Law of Amplification, 30 responsibility for the impacts of technology, 56 See also

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) systematic and venal, 266(n10) US struggle against, 177–178 See also Democracy and democratization; Governance Creative class, 166, 186–187, 190–191 Credit. See Microcredit Critical thinking skills, 11, 13–14, 137 Cuban, Larry, 7 Cultural capital, 131, 142, 250(n11) Cultural relativism, 169, 177, 263–264(n44) Culture

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and training Cyberbalkanization, 47 Daedalus, xvi Danel, Carlos, 66–67 Darrow, Benjamin, 7 Davidson, Richard, 88, 243(n41) Debt, household, 60–61. See also Microcredit Deci, Edward, 157, 261(n24) Delay of gratification, 173, 252(n15). See also Self-control Democracy and democratization comparison to free market, 48 education, 255

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20–21, 229(n2), 230(n13) Development, social and economic developed country commonalities, 178–182, 266–267(n11) group intrinsic growth, 136–139, 174–191 microcredit programs, 59–60 national development, 172–191, 268(n20) patterns of progress, 266–267(n11) See also Economics; Intrinsic growth; Poverty alleviation Development Alternatives organization

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happiness, 88 health care, 42–44, 137–138 India’s high-tech economy, 182–185 studies of education, 8, 12, 31, 77–82 studies of microcredit, 59–61 mainstream economics, 82 measurement, 91–92 mobile phones and development, x technological determinism of, 20 See also Business and entrepreneurship; Incentives; Inequality;

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of Technology, 183–185 India’s Backward Class, 139–142 intrinsic growth effects, 143–146 lack of technical support for faculty and staff, 5–7 microcredit beneficiaries, 67–68, 71–72 nonformal education, 77–80, 240(n10) parental status and achievement, 250–251(n13) poverty alleviation, 67–68 questioning the

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94 Ellul, Jacques, 23–24 Emotional intelligence, 132–133, 252(n16). See also Heart, mind, and will Employment, computer literacy and, 19–20. See also Microcredit; Poverty alleviation Enlightened self-interest, 253–254(n23) Enlightenment, 95–98, 245(n61) Entertainment, 18–19, 23–24, 31, 122–123, 230(n13), 248–

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the Twenty-First Century (Thompson), 75–76 Meritocracy, 79, 93, 96, 97–98, 181 Mexico: for-profit microlending, 58–60, 66–67, 236(n7) Microcredit alternatives to, 57–60 beneficiary demographics, 61 evaluation of, 59–61, 236–237(n14) financial education, 124 global spending on, 72 importance of implementation, 61

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trials, 80–82 recommendations for, 108–109, 124 systemic obstacles, 68–69 technology as special case, 57 vaccines, 64–65 See also Digital Green; Gamification; Microcredit Pakistan: India’s high-tech economy, 183 Pal, Joyojeet, 4, 227(n1) Pan, Jennifer, 49 Panacea, technology and packaged interventions as, 58, 70, 73,

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Personality, human maturation and, 161 Personality development, 161, 260(n17). See also Intrinsic growth Peru: One Laptop Per Child, 8 Phablets, 48, 234(n23) Philippines: microcredit programs, 59–60 Piaget, Jean, 161, 260(n18) Pilotitis, 70. See also “The Iron Law of Evaluation and Other Metallic Rules” Pinker, Steven, 191,

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, 237(n20) Poverty: learned helplessness, 130, 249(n8) Poverty alleviation. See Agriculture; Digital Green; Economics; Education; Foreign aid; Health and health care; Governance; Mentorship; Microcredit; Nonprofit organizations; Social enterprise; Vaccines Pradan organization, 223, 273(n24) aspirations in mentees, 199–201 collective action for social change, 254(n31) Digital Green partnership

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Ana, 8 Sarkozy, Nicholas, 89, 98 Sartre, Jean-Paul, 56, 235(n36) Saudi Arabia: Arab Spring, 34, 37 Savings and debt, 60–61. See also Microcredit Saxenian, AnnaLee, 16, 183–184 Scale challenges of achieving, 57, 64–65, 69–70, 82 consumption, 97 expenditures on, 72 large-scale social programs, 58

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, 213–214, 274–275(n4) See also Amplification, Law of; Aspirations; Digital Green; Education and training; Heart, mind, and will; Intention; Intrinsic Growth; Mentorship; Microcredit; Packaged interventions Social determinism, 26, 29–30, 231(n26). See also Technological determinism Social enterprise, 84–87, 91 Social media Arab Spring, 32–35 children

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status Ashesi student success, 127 compassionate class, 188–191 creative class, 186–187 digital divide, ix, 47–49, 234(n24) Maslovian growth, 270(n43) microcredit beneficiaries, 61 obesity and, 235(n32) Shanti Bhavan student success, 141 two-tiered education system, 94 See also Economics; Education and training; Inequality; Social change

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Soronko, 151–152, 154, 157 South Africa: microcredit programs, 59–60 Space programs, 177–178, 266(n9) Spandana organization, 236–237(n14) Spinoza, Baruch, 96 Sreenivasa, Tara, 139–141, 147–149, 254

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USAID), 86, 272(n12) Universal suffrage, 63 Untouchables, India’s, 64 Urban migration, 268(n21) Uruguay: One Laptop Per Child, 8 Usury, 58. See also Microcredit Utilitarianism, 88 Utopians, technological, 20–22 Arab Spring as Facebook revolution, 33 characteristics and views, 21–22 faith in future technologies, 21–22 indiscriminate dissemination

Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty

by Abhijit Banerjee and Esther Duflo  · 25 Apr 2011  · 370pp  · 112,602 words

Men from Kabul and the Eunuchs of India: The (Not So) Simple ... LENDING TO THE POOR MICRO INSIGHTS FOR A MACRO PROGRAM DOES MICROCREDIT WORK? THE LIMITS OF MICROCREDIT HOW CAN LARGER FIRMS BE FINANCED? Chapter 8 - Saving Brick by Brick WHY THE POOR DON’T SAVE MORE THE PSYCHOLOGY OF SAVINGS

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of livestock, which are standard products in the lives of farmers in rich countries, are more or less absent in the developing world. Now that microcredit is something that everyone knows about, insurance for the poor seems like an obvious target of opportunity for the high-minded creative capitalist (a Forbes

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, the trick is to start from a large pool of people who came together for some other reason than health—employees of a large firm, microcredit clients, card-carrying Communists . . . and try to insure all of them. This is why many microfinance institutions (MFIs) thought of offering health insurance. They have

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a large pool of borrowers who could be offered insurance products. And because catastrophic health problems sometimes drive the otherwise highly compliant microcredit clients into default, health insurance for them would be a little bit of insurance for the MFI as well. Moreover, it would be easy to

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was asking us about our work with SKS, and when we said we were working on evaluating the impact of offering mandatory health insurance to microcredit clients, she laughed and said, “Oh, I know the effect! Everywhere SKS made this product mandatory, we got many more clients. People are leaving SKS

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PROGRAM From its modest beginnings with the Bangladesh Rehabilitation Assistance Committee (universally known as BRAC) and the Grameen Bank in the mid-1970s in Bangladesh, microcredit is now a global phenomenon. It has reached anywhere between 150 and 200 million borrowers, mainly women, and is available to many more. It is

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, India’s largest microfinance institution, raised $354 million.) One can see why Yunus may not like the association with usury, but in a (good) sense microcredit is moneylending reinvented for a social purpose. Like traditional moneylenders, MFIs rely on their ability to keep a close check on the customer, but they

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even higher than 100 percent per year, but remain much lower than the other alternatives for poor people. In urban Brazil, for example, MFIs offer microcredit at the rate of about 4 percent a month (60 percent a year), and the easiest alternative, which is credit-card-debt refinancing, costs between

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, with its 150 to 200 million clients, has earned its place as one of the most visible anti-poverty policies. But does it work? DOES MICROCREDIT WORK? The answer obviously depends on what you mean by “work.” According to the more enthusiastic backers of microfinance, it means transformation of people’s

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lives. The Consultative Group to Assist the Poor (CGAP), an organization housed at the World Bank and dedicated to promoting microcredit, reported at some point in the FAQ section of its Web site that “there is mounting evidence to show that the availability of financial services

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turned out to be case studies, often produced by the MFIs themselves. For many supporters of microcredit, this appears to be enough. We met a prominent Silicon Valley venture capitalist and investor, and supporter of microcredit (he was an early backer of SKS), who told us that he needed no more evidence

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data” to know the truth. But anecdotal data do not help with the skeptics out there, including large sections of governments everywhere that worry that microcredit might be the “new usury.” In October 2010, just two months after SKS’s successful IPO, the Andhra Pradesh government blamed SKS for the suicide

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need to be evaluated any more than an apple seller does?” By which they meant that as long as the clients came back for more, microcredit had to be beneficial to them. And because MFIs are financially sustainable, and do not depend on the generosity of donors, evaluating exactly how beneficial

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a bit disingenuous. Most MFIs are subsidized by the generosity of donors and the enthusiastic efforts of their staff, largely based on the belief that microcredit is better than other ways to help the poor. Sometimes they are also subsidized by policy. In India, microfinance qualifies as a “priority sector,” which

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the poor, so she started working with an NGO. This was when she met the ragpicker we described earlier, who prompted her to start a microcredit operation. When the NGO she worked for refused, she opened Spandana. Despite her success and her commitment to microfinance, Padmaja Reddy describes the potential benefits

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some fluke, and it would be important to see how things panned out in the long run, but so far, so good. In our minds, microcredit has earned its rightful place as one of the key instruments in the fight against poverty. Interestingly, this is not how the main results played

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industry seems to be going. At a conference in New York City in fall 2010, where similar results were presented, all the attendees agreed that microcredit as we know it has its strengths and its limits, and that the next order of business was to see what microfinance organizations could do

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to deliver more to their clients. THE LIMITS OF MICROCREDIT Why didn’t microcredit deliver more than it did? Why didn’t more families start new businesses, given that they now had access to capital at affordable

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borrowed from moneylenders at much higher rates and that fraction was more or less unaffected by the introduction of microcredit. We don’t claim to be able to explain in full why microcredit is not more popular, but it probably has something to do with precisely what makes it able to lend

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relatively cheaply and effectively—namely, its rigid rules and the time costs it imposes on its clients. The rigidity and specificity of the standard microcredit model mean, for one thing, that since group members are responsible for each other, women who don’t enjoy poking into other people’s business

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, you borrow from the local moneylender, pay up, and then start looking for an extra job that will allow you to pay for the loan. Microcredit would not offer you this flexibility. The same requirement must also discourage taking on projects that only pay off after some time, since there needs

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on “zero default” that characterizes most MFIs is too stringent for many potential borrowers. In particular, there is a clear tension between the spirit of microcredit and true entrepreneurship, which is usually associated with taking risks and, no doubt, occasionally failing. It has been argued, for example, that the American model

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money in the hands of people who might fail. This is not an accident, nor is this due to some shortcoming in the microcredit vision. It is the necessary by-product of the rules that have allowed microcredit to lend to a large number of poor people at low interest rates. Moreover

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, microcredit may not even be an effective way to discover entrepreneurs who will then go on to set up large businesses. Microfinance gives its clients

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operation, Grameen Bank’s loans remain, for the most part, very small. HOW CAN LARGER FIRMS BE FINANCED? But maybe it does not matter that microcredit is not designed to lend to larger borrowers. As we saw, credit constraints are likely to be much tighter for very poor borrowers than for

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invest in becoming more patient: By implication, therefore, poverty makes people (permanently) more impatient.1 One of the great virtues of the recent movement, among microcredit enthusiasts and others, to recognize the nascent capitalist inside every poor man and woman is that it moves us away from this view of the

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women, but then, still smiling, went into a brief harangue about how they could improve their futures by cutting back on tea and snacks. Most microcredit institutions disapprove of borrowing to buy consumption goods—some actually put a lot of effort into making sure that their money gets spent on some

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she often says, knows how her clients think. As we saw in Chapter 7 on credit, one of the clearest impacts of getting access to microcredit was to reduce exactly the items that the women had told us they would like to give up—tea, snacks, cigarettes, alcohol. Total monthly spending

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on these goods went down by about 100 rupees ($5 USD PPP) per family for those that took an extra microcredit loan as a result of the program, or about 85 percent of what the average household spends. By itself, the cut in this kind of

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MFI Al Amana in rural Morocco: They cut on social expenditures (and for some of them, on all expenditures), and built up their savings.14 Microcredit, of course, is just one of many ways in which we can help the poor think in terms of a future where some of their

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ready to roll. Since 2007, we have been working with Al Amana, one of Morocco’s largest MFIs, to evaluate the impact of access to microcredit in rural communities that had previously been completely excluded from formal financial sources. After about two years, it became evident that Al Amana was not

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years in jail as a political prisoner and was entirely devoted to improving the lives of the poor. We discussed the surprisingly low demand for microcredit. In particular, we went back to the story of Ben Sedan, who was convinced that he had no use for more money. Fouad drew up

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profitability of businesses run by the poor also explains why, as we saw in Chapter 7 (in our RCT of the Spandana program, for example), microcredit does not seem to lead to a radical transformation in the clients’ lives. If the businesses run by the poor are generally unprofitable, this may

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much, and what they can borrow is very expensive. But this is not the whole answer. First, as we saw, although there are millions of microcredit borrowers, there are many more who have the opportunity to borrow but choose not to. Ben Sedan was one of them. He had a business

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raising cows and could have grown it with a microcredit loan, but he decided against it. Even in Hyderabad, where there are several competing MFIs, the sign-up rate for any

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among families who were eligible to borrow was only 27 percent, and only 21 percent of those who had a small business had taken a microcredit loan. Moreover, even those who cannot borrow can save: Consider the shopkeeper family in Gulbarga. They lived on about $2 per day per person. In

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the way out of poverty is not one more shed with some cows in it, but a son with a secure job in the army. Microcredit and other ways to help tiny businesses still have an important role to play in the lives of the poor, because these tiny businesses will

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. In some cases, a technological or an institutional innovation may allow a market to develop where it was missing. This happened in the case of microcredit, which made small loans at more affordable rates available to millions of poor people, although perhaps not the poorest. Electronic money transfer systems (using cell

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be able to complete, and yet no one feels compelled to change their job description. The fad of the moment (be it dams, barefoot doctors, microcredit, or whatever) is turned into a policy without any attention to the reality within which it is supposed to function. We were once told by

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the Philippines,” World Bank Policy Research Working Paper 4008 (2006); and Xavier Giné and Dean Karlan, “Group Versus Individual Liability: Long Term Evidence from Philippine Microcredit Lending Groups,” working paper (2010). 17 Emily Breza, “Peer Pressure and Loan Repayment: Evidence from a Natural Experiment,” working paper (2010). 18 Abhijit Banerjee and

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, Rachel Glennerster, and Cynthia Kinnan, “The Miracle of Microfinance?,” MIT, manuscript (2010). Bruno Crépon, Florencia Devoto, Esther Duflo, and William Parienté, “Evaluation d’impact du microcrédit en zone rural: Enseignement d’une expérimentation randomisée au Maroc,” MIT, mimeo. Chapter 9 1 C. K. Prahalad, The Fortune at the Bottom of the

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of choice in top-down “Efficient household” model Einstein, Albert Elders, caring for Emergency (1975–1977) Emptat, Ibu Entrepreneurs micro- rules of thumb and Entrepreneurship microcredit and poor and problems with rates of return for technologies and Ethnicity Experiment Faith Family extended function of Family planning encouraging Family Planning and Maternal

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for Madiath, Joe Malaria eradication of Malnutrition Malthus,Thomas Maquilladoras Margin, changes at Marginal return Maternal mortality Matlab program Mbarbk, Oucha Medicare Medicine Meillassoux, Claude Microcredit effectiveness of limits of poor/future and Microfinance contracts movement Microfinance (continued) poor and poverty and repayment discipline and Microfinance institutions (MFIs) borrowing from insurance

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for loans from microcredit and monitoring by poor and subsidizing of successful borrowers and zero default and See also Institutions Micronutrient Initiative Micronutrients Migration Millennium Development Goals (MDGs) Miller

Portfolios of the poor: how the world's poor live on $2 a day

by Daryl Collins, Jonathan Morduch and Stuart Rutherford  · 15 Jan 2009  · 296pp  · 87,299 words

following standard accounting practices but distorting the real picture. The adjustment works in reverse, too. For example, when policymakers say, as they sometimes do, that microcredit providers offer a good price as long as it beats the annualized interest rate charged by moneylenders, there is something amiss. The diaries show that

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large, long-term loan. Annualized rates may not be the most 22 THE PORTFOLIOS OF THE PO OR appropriate way to compare a large, yearlong microcredit loan with a small, short-term loan from a moneylender, and poor households may not be behaving irrationally if they sometimes choose the moneylender over

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the microcredit provider. Other pricing conundrums are there to be looked at, as we do in chapter 5. Poor households may choose portfolio combinations that rich-country

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that. She spent part of a loan she took from a microlender (at about 36 percent interest for a yearlong term) to buy gold. The microcredit loan represented a rare opportunity to get her hands on a sum large enough to buy a substantial lifelong asset offering security against the disruptions

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a bank account enough to achieve that broader purpose? When Yunus started Grameen, his focus was not on microfinance but on microcredit. Moving to microfinance from the narrower goal of microcredit begins with the recognition that poor households want to save and insure as well as borrow. Lately, Grameen itself, as we

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taken up the cause of saving with energy and innovation. The financial diaries show in daily detail why the shift from an exclusive focus on microcredit to the broader microfinance is an important and welcome advance. But the diaries also show the need to push further. The idea of

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long been associated with the promotion of enterprise: to enable people to purchase productive assets and working stock to set up in business. Microcredit has thus come to be closely associated with the customers’ “microenterprises” (the name signals their small scale; often such enterprises employ just the owner and

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workers.) When the turn toward microfinance opened possibilities, it did not entail a reassessment of the uses for microcredit. A fundamental but easily overlooked lesson from the diaries is that the demand for microcredit extends well beyond the need for just microenterprise credit. The poor households in the study seek loans for

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cope with emergencies, acquire household assets, pay schooling and health fees, and, in general, to better manage complicated lives. In chapter 6 we show that microcredit is often diverted from its intended uses (of running businesses) to other uses ranked more important by households. This lesson has not yet been well

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recognized by promoters of microcredit and microfinance. Organizing borrowers into groups who pledge joint liability for each other’s loans (also known as “social collateral”) has been the chief mechanism

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to exaggerate the importance of these developments, which we saw clearly when we looked at microfinance through the eyes of Bangladesh diarists. Irrespective of how microcredit loans were used, borrowers appreciated the fact that, relative to almost all their other financial partners, microfinance providers were reliable. That is, the loan

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; and they showed their clients that they took their transactions seriously. In return, we noticed that these Bangladeshi microfinance clients often prioritized the repayment of microcredit loans above those of other providers. That didn’t surprise us. For poor households, as we have seen, financial lives are often uncertain. The

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those celebrated by advocates of microfinance for the poor. In the year we spent with them, Subir and Mumtaz did not, for example, seek a “microcredit” loan to fund the expansion of a small business. True, Subir could have earned more if he owned his own rickshaw rather than renting, and

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for Subir, freeing him from the cost of renting one. Such microlending to support microenterprise or self-employment has been a leading premise of the microcredit movement. But the couple decided that buying a rickshaw was too risky because they had nowhere safe to park it at night.8 Instead, they

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examples can be found in our diary work in South Asia. The first of these features—small, frequent payments—has already been embraced by “semiformal” microcredit providers. Muhammad Yunus and his Grameen Bank—joined by others in Latin America, Africa, and Asia—offer loans that can be paid back in small

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and respects the small cash flows of poor households. Bangladesh was the only one of our three countries where microfinance institutions had a large presence. Microcredit loans there were ostensibly restricted to business uses, but as Subir and Mumtaz’s case shows, they can be diverted to other, sometimes multiple,

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the decision to hold premium flows in the communities rather than bring them to the head office, and to lend them back to clients using microcredit methods (that is, in a group setting with frequent repayments made on loans with a one-year term). This combination—simplified life coverage attached

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makes it hard for informal and semiformal providers to compete with formal providers in the way that they have so spectacularly succeeded in doing for microcredit. On the other hand, insurers like those entering the funeral insurance market in South Africa must not only be confident that moral hazard and

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while contributing her bit to the housekeeping: she married and left home just before the end of the year. Kanon was a client of a microcredit provider, and before the year had taken a loan of $110 that they used for a string of needs: drugs for Sultan’s health problems

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neighbors, consumption, and paying overdue rent on the waste-sorting yard. In addition, Kanon’s older daughter, already married and away from home, gave her microcredit loan to Sultan and Kanon to help fund Sweetie’s marriage. Sultan and Kanon gritted their teeth and kept up with the weekly loan payments

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on both these loans: $3.76 a week, week in, week out. On top of that, they saved another 75 cents each week with the microcredit NGOs. So, for months on end, they managed to squeeze $4.51 out of a weekly income of $20 or less, to repay their loans

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and save at the microcredit meetings. Or take Sita, whom we met in chapter 2, a widow from the India rural site with low and very uneven income as a

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real possibility, in the environment she lived in, that she could be widowed prematurely, or perhaps deserted or divorced. She used a financial tool—a microcredit loan—to buy gold. Her case is a good example of how poor households may use the short-term financial tools that are available to

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pension plans, that aren’t available. Vishaka, a diarist in a Delhi slum, would have seen eye to eye with Khadeja. Unlike Khadeja, who used microcredit, Vishaka used a savings club as her short-term saving instrument. When she received her payout from the club, her husband, Om Pal Singh, suggested

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along with another $10 interest, and then $40, repaid after two months with another $14 interest), and used a $200 loan taken earlier from a microcredit lender. For the son’s marriage, a few months later, they were on the receiving end of dowry payments—$100 in cash and $13 worth

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tools to allow them to do so. Instead, emergencies were met with a mosaic of smaller loans and savings combined with asset sales. In Bangladesh, microcredit loans were seldom available for emergencies, because they were disbursed on an annual cycle, with prepayments (which would lead to the early release of a

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fresh loan) not allowed. If microcredit loans contributed to emergencies, they did so indirectly: a microcredit client might be able to secure a private loan, for example, by assuring the lender that she was due to get

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a microcredit loan within the next few months and thus would be positioned to repay the moneylender. Likewise, many savings clubs in all three countries pay out

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sums used to finance working capital did not reach the value of the average monthly income that we used as a benchmark. In Bangladesh, the microcredit providers, whose self-declared job it was to provide business capital to poor households, contributed to these numbers, but were responsible for only a minority

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(58 percent) of these were formed in the informal sector, but a substantial proportion were formed in the formal sector and just a handful through microcredit loans. Nearly all “formal” lump sums used for business came from bank or credit cooperative loans to farmers, another demonstration of the banks’ commendable

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for lending to others. Where lump sums can be raised cheaply relative to other means, it makes sense to arbitrage: we have recounted stories where microcredit borrowers quickly lend their capital to others who not only repay and service the loan but pay additional interest, perhaps in the form of contributing

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indeed, it is similar to the way that many richer people pay for insurance or contribute to pensions. It is one of the features that microcredit pioneers adapted to form new financial innovations. We pay attention to this and other special features of the devices and strategies used by the diary

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it on gold jewelry that she saw as a vital store of value for her future, used the pressure that the weekly discipline of her microcredit provider exerted on her. Like Seema, Khadeja saw the truth of an oddsounding paradox: if you’re poor, borrowing can be the quickest way

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friends who had been required to vouch for him and guarantee his full participation. mismatched On the whole, though with some disappointing exceptions, the Bangladesh microcredit loans discussed earlier in the chapter worked reliably. As we noted in an earlier chapter, users greatly appreciated 125 CHAPTER FOUR their “contractuality”—the fact

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have been the subject of much recent enquiry.20 But at another level this is a practical matter. In Bangladesh, to keep things simple, the microcredit lenders offered only one loan term— a year—and only one repayment schedule—equal invariable weekly installments. Such a tight schedule is wonderful for discipline

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on borrowers with very small and very variable cash flows. So in Bangladesh, we found that the very poorest have been either unable to join microcredit schemes, or, having joined, soon leave after failing to complete a repayment on time. These “very poorest” are typically landless farm laborers, who have

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in. They can pay each week most months, but not in every month of the year. Several of our poorest rural diary households had quit microcredit schemes after such an experience, a few were experiencing them during the research year, and others were reluctant to take a loan for fear of

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failing. Sita, the Indian diarist we met earlier in this chapter, had a disappointing time as a microcredit client. She had taken her first microfinance loan the year before we met her, after saving for a few months. The loan of $43,

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can be reasonably sure to recover within a predictable time span during which they expect to be able to keep tabs on the borrower. The microcredit lenders in Bangladesh worked to create a model in which loans were to be invested in small businesses, with loan values calibrated to the capacity

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fees on their loans for similar—and good—reasons. It is an obvious way of reducing risk. Microfinance Lending Within this environment, how have the microcredit institutions adapted? In Bangladesh, where they collect loan interest along with repayments at weekly intervals, they and the formal banks are the only providers that

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a service that suited them, as opposed to being suitable only for “those who can invest.” This echoes another of our themes: the focus on microcredit for microenterprise has contributed enormously to the attraction, success, and spread of microfinance, but has had the unfortunate side effect of diverting attention from a

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government regulated form of RoSCA (see below) found only in India. Pro-poor insurers are found only in Bangladesh: they adapt the methods of NGO microcredit banks to offer endowments (savings plans linked to life insurance) to the poor, and to recycle the premiums as loans to the poor. Saving-up

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, Armando, and David Hulme. 2008. Social Protection for the Poor and Poorest. London: Palgrave. Bauer, Michal, Julie Chytilova, and Jonathan Morduch. 2008. “Behavioral foundations of microcredit: Experimental and survey evidence from rural India.” Unpublished manuscript, Financial Access Initiative. Available at www .financialaccess.org. Bertrand, Marianne, Simeon Djankov, Rema Hanna, and Sendhil

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. 2008. “Credit elasticities in less-developed economies: Implications for microfinance.” American Economic Review 98 (3): 1040–68. 268 BIBLIOGRAPHY Khandker, Shahidur. 1998. Fighting Poverty with Microcredit: Experience in Bangladesh. Washington, DC: World Bank. Khandker, Shahidur, Baqui Khalily, and Zahed Kahn. 1995. “Grameen Bank: Performance and sustainability.” World Bank Discussion Paper 306

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next revolution?” In Understanding Poverty, ed. Abhijit Banerjee, Roland Benabou, and Dilip Mookherjee. New York: Oxford University Press. ———. 2008. “How can the poor pay for microcredit?” Financial Access Initiative Framing Note Number 4. Available at: www.financialaccess.org. Mullainathan, Sendhil. 2005. “Development economics through the lens of psychology.” In Annual World

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’Donahue, Ted, and Matthew Rabin. 1999b. “Incentives for procrastinators.” Quarterly Journal of Economics 114 (3): 769–817. Patole, Meenal, and Orlanda Ruthven. 2001. “Metro moneylenders: Microcredit providers for Delhi’s poor.” Small Enterprise Development 13 (2): 36–45. Pauly, Mark. 1968. “The economics of moral hazard: Comment.” American Economic Review 58

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of, 15–16; financial turnover per annum, 33; informal interestfree loans, 49–51; informal transactions, predominance of, 53; land, investment in, 107–8; microcredit: “credit-life” insurance, 75; microcredit: participation of the poorest in, 126; microfinance: Grameen II diaries, 159– 60; microfinance: number of customers, 155; microfinance: remaining shortcomings and the future

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251n.10; land, investment in, 107–8; loans: bank innovations in, 63–64; loans: rescheduling of, 140–41; Maharashtra state, employment guarantee scheme in, 71; microcredit: example of difficulties with, 276 INDEX 126–28; microfinance, 24; micro health insurance schemes, 92; moneylenders, 142–43; opportunities, investment in, 107–9; purchasing power

A World of Three Zeros: The New Economics of Zero Poverty, Zero Unemployment, and Zero Carbon Emissions

by Muhammad Yunus  · 25 Sep 2017  · 278pp  · 74,880 words

people, particularly the poorest women, trying to remove the hurdles they face in their efforts to improve their lives. Through the tool known as microcredit, Grameen Bank, which I launched in my home country of Bangladesh in 1976, makes capital available to poor villagers, especially women

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. Microcredit has since unleashed the entrepreneurial capabilities of over 300 million poor people around the world, helping to break the chains of poverty and exploitation

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that have enslaved them. The impact of microcredit in enabling millions of people to lift themselves out of poverty helped to expose the shortcomings of a traditional banking system that denied its services

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accelerated despite the positive effects of national and international development programs, income redistribution programs, and other efforts to alleviate the problems of low-income people. Microcredit and other programs have helped many lift themselves out of poverty, but at the same time the richest have continued to claim a greater share

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to 9 million poor women on the basis of trust only. It enjoys a repayment rate (as of 2016) of 98.96 percent. And microcredit banks that run on the same principles are operating successfully in many other countries, including the United States. For example, Grameen America has nineteen branches

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The unbanked of the world need access to real banking, not a handful of tiny programs undertaken mainly as public relations ploys. My work with microcredit led me to question the very basics of the banking system. I discovered that real human beings are much bigger than the human beings assumed

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people have been able to lift themselves out of poverty. The credit goes to increased access to free markets, technological developments, and programs such as microcredit that make capital for investments available to those who were once shut out of the capitalist system. But prosperity is bringing its own challenges. The

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opportunity for young people in Bangladesh. As I’ve explained, Grameen Bank and the financial system known as microcredit started out with a tiny initiative in the village of Jobra in 1976. Microcredit has since grown into a worldwide movement that has helped over 300 million poor families improve their economic

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conviction—and helping thousands of low-income youth escape the trap of unemployment. FROM LOANS TO EQUITY: KEY TO PROMOTING ENTREPRENEURSHIP WHEN I WAS PROMOTING MICROCREDIT for poor women in the early years of Grameen Bank, many experts around the world insisted that the concept would fail because entrepreneurship is a

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, men or women, rural or urban, rich or poor. The Nobin program has its roots in the same firm belief. One big difference between microcredit and the Nobin program is that the latter focuses on providing would-be business builders with equity financing—that is, investment funding—rather than loans

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person after another out of joblessness, bringing the day of zero unemployment steadily closer. FROM THE VILLAGES OF BANGLADESH TO THE STREETS OF NEW YORK: MICROCREDIT AS A TOOL FOR PROMOTING ENTREPRENEURSHIP EVEN IN THE WEALTHIEST COUNTRIES on Earth, large numbers of people are stuck in poverty or near-poverty because

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bank that has brought the methods and philosophy of Grameen Bank from Bangladesh to cities across the United States. For decades, people have wondered whether microcredit could empower poor people and alleviate the harm caused by unemployment in wealthy nations. This is one of the reasons government and business leaders from

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social business fund to raise capital. One of the crucial lessons of GAI lies in the fact that the operating principles and systems that make microcredit successful in places like New York and Nebraska are almost precisely the same as those we developed for use in the villages of Bangladesh.

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in school, nurturing the health and well-being of their families, and otherwise building toward a better future. In all these ways, the Grameen microcredit formula in the United States is exactly the same as in Bangladesh. It’s important to understand that not all of the organizations around the

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world that have jumped on the microcredit bandwagon have followed the same consistent rules. Many NGOs have launched microcredit programs that ignore or twist the principles that made Grameen Bank successful and effective. Most egregiously, some have converted

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microcredit from a social business dedicated to helping poor people (and, in the case of Grameen Bank, actually owned and controlled by the poor people themselves

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) into a money-making scheme designed to enrich the affluent by making profits off the poor. One result has been so-called microcredit companies that charge interest rates of 80 percent or more, several times the maximum rate charged by Grameen Bank. They justify these exorbitant rates by

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most of the money they earn from their businesses, rather than having to pay it to Grameen Bank as the cost of their loans. Other microcredit organizations insist on collateral for loans—property that the borrowers pledge to guarantee their debt. This practice excludes the world’s poorest people, the

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help. In other cases, companies selling nonessential consumer products lure poor people to buy them by arranging finance through so-called microcredit programs. This is completely contrary to the Grameen purpose. We lend money to support productive investments so that the borrowers can build assets and

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traps them more firmly in the chains of poverty rather than liberating them. For all these reasons, I urge people who want to understand how microcredit really works to study the Grameen organizations, including the Grameen Bank in Bangladesh, GAI in the United States, and many others around the world.

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I strongly condemn microcredit programs that are designed to make money for their rich owners. They are a distortion of the model we created to help the poor to

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overcome poverty, which abuses the concept of microcredit and confuses the world about the purpose of microcredit. Of course, economic and social conditions in Bangladesh and the United States are very different. So are some of the

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and new nonprofit organizations in the surrounding communities to launch and grow social businesses. In partnership with Millbury National Bank, it has also created a microcredit program to provide loans for startup social businesses in central Massachusetts, with special emphasis on projects being launched by Becker College students or recent graduates

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marriage, Jessica moved to Uganda to work with a microfinance NGO. She found out that the limiting factor for reaching more poor people with microcredit is the lack of resources to give loans. This inspired Jessica and Matt in their own efforts to make capital available to those who would

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natives,” raised to feel comfortable with technology. It was natural to them to think about how they could use ICT to multiply the impact of microcredit. The result was Kiva. Kiva uses an Internet platform to connect entrepreneurs who need capital with others who have money to spare. Kiva allows

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Kilimo Salama. To make ACRE’s insurance affordable and widely available, they’ve bundled it with other products that farmers are already buying, such as microcredit loans and even packages of seed or fertilizer. The process of getting insurance is very simple. A packet of seeds contains a small card describing

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generating enough money to remain solvent and independent through its simple system of lending, loan repayments, and member savings. And unlike the mainstream banking system, microcredit has certainly never generated financial uncertainties that have affected the entire society and threatened the stability of the national or world economy. In view of

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fragile, forcing them to struggle continuously for survival. Provide them with the oxygen, and you’ll see how lively and economically healthy they become. Thus, microcredit is not just about giving tiny loans to poor women. It is a challenge to the entire financial system. Grameen Bank does everything that the

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from all people and to lend that money to the poor. This can be done by giving limited banking licenses to the NGOs that operate microcredit organizations. In too many jurisdictions, this commonsense practice is not permitted. The right regulations should allow a microfinance organization to expand through mobilizing deposits—

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the best efforts to get a new law, existing laws for various types of financial institutions could be adapted to better support the spread of microcredit and to empower existing facilities. For example, the Reserve Bank of India, the nation’s central bank, is now issuing limited banking licenses to

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is a shortage of money for social business? Some argue that it is government’s job to create organizations that will serve the poor, including microcredit banks to provide them with financial services. I oppose this idea. I would be very careful about using government money for any social business

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that focuses on lending money to low-income people. For example, I would not recommend that governments get involved in running microcredit banks or programs. It’s extremely difficult for a political entity to recover money that it has loaned to poor people. Even when the

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company that is the largest in France. Jean-Luc Perron, then a senior executive in charge of European affairs at Crédit Agricole, became interested in microcredit in 2006. He found that Georges Pauget, then the CEO of Crédit Agricole, was also a strong supporter of the idea that the bank

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should play an active role in promoting microcredit as a tool to eradicate poverty. Perron proposed a plan for action by the bank. As part of the implementation of that plan, Perron

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Grameen Bank branches operate, and ultimately came to meet me to ask me to help them. They proposed a partnership with Crédit Agricole in supporting microcredit as well as the broader concept of social business. After working out the ground rules, we agreed to work together on a global scale.

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and choosing only the most promising to receive funding. “Investing in social business is more difficult, and a bit more risky, than investing in microcredit,” Perron explains. “Microcredit is a well-established financial technology proven through extensive experience. By contrast, every new social business is unique! So we devote a lot of

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Vanderbilt University. In 1972 he became head of the economics department at Chittagong University. He is the founder of Grameen Bank and the father of microcredit, an economic movement that has helped lift millions of families around the world out of poverty. He is also the father of social business.

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Balkans, 139 climate change and, 46 corporate control over, 45 creditworthiness and, 191–192 fertilizer technology and, 194–195 France and, 191 Haiti and, 107 microcredit for, 192–193 microinsurance and, 192 Mrittikā for, 196 oil prices and, 46 risks of, 191 technology with, 190 Agriculture and Climate Risk Enterprise Ltd

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accelerator program for, 134 countereconomics of, 30–32 DNA of, 30 for economic growth, 105 enabling women through, 92–93 high school students and, 155 microcredit for, 74, 84–90 poor people and, 38, 90 promotion of, 81–84 reducing regulations for, 238 social business and, 231 against wealth concentration,

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, 208–210 public opinion mobilized by, 20 social business and, 247 social business funds and, 254 tyranny in, 224 Grameen America economic distress and, 85 microcredit bank of, 12–13 poor people and, 50 Grameen America, Inc. (GAI) creation of, 85 funding for, 86 lessons of, 86 in urban areas,

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at, 215 economic crisis and, 232 economic engine and, 15 entrepreneurs and, 30, 76 finance and, 244 financial system and, 22–25 ICT and, 182 microcredit and, 3 microfinance and, 24 money availability of, 217–218 ownership of, 234 selfishness and, 12 transparency of, 233 as trust-based banks, 233, 235

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and, 156 technology and, 189 Vanizette and, 157 Male, William, 111 marketplace, 177 McCain Foods, 136 MDGs. See Millennium Development Goals micro wealth gathering, 92 microcredit for agriculture, 192–193 for entrepreneurship, 74, 84–90 Grameen Bank and, 3 millennials and, 183 NGOs and, 86 other organizations for, 87–88 poor

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people and, 237 poverty and, 4 programs of, 154 social business and, 250 success of, 86 microcredit bank, 12–13 micro-entrepreneur, 92 microfinance, 237 financial institutions and, 238 Grameen Bank and, 24 NGOs and, 24 simplifying laws of, 236 microinsurance, 192

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millennials capitalism and, 145 economic problems for, 147 economic system distrusted by, 145 microcredit and, 183 Millennium Development Goals (MDGs), 41 accomplishments of, 122–123 goals of, 120–121 importance of, 121 measurements against, 122 Milosevic, Slobadan, 133

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financing with, 81 methodology of, 83 unemployment and, 73–81 for US poor people, 90 nongovernmental organizations (NGOs) civil institutions and, 220 experts for, 59 microcredit and, 86 microfinance and, 24 SDGs and, 131 nonprofit organization, 36 North Star, 177 nuclear power plants, 100 oil prices, 46 old people, 170, 171

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25 France and, 61 Golden Bees and, 39 governments and, 246 Grameen America and, 50 health care and, 50, 196 high technology and, 31–32 microcredit and, 237 Mobiliz and, 63 money borrowing for, 74 poverty and, 48 problems for, 3, 50 regulatory waivers for, 239 technology and, 177, 190–

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96, 100 poverty elimination of, 65, 127 French Action Tank and, 60–65 human creativity and, 266 human happiness and, 49–50 ICT and, 193 microcredit and, 4 new economic system and, 66 poor people and, 48 problems with, 120 reduction of, 122, 129 in rural and urban areas, 89 social

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creativity and, 264 human problems and, 18, 27 Impact Water as, 113 infrastructure and, 213 investments and, 246 investor guidance for, 80 MakeSense and, 156 microcredit and, 250 new civilization through, 132 new economic framework and, 25–30 objective of, 265 phase two of life and, 170 poverty and, 31, 48

How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy

by Mehrsa Baradaran  · 5 Oct 2015  · 424pp  · 121,425 words

or restricted from market competition. Niche “poverty banks” would simply pop up in the market and fill the void created by competitive forces. MICROCREDIT: MARKET-BASED PHILANTHROPY Microcredit, a market-based lending principle, has been the most heralded and controversial modern effort to lend to the poor. Though not a significant part

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had evangelical leaders who saw it as the wave of the future and the cure to all sorts of social ills, microcredit was also seen as a potential cure to poverty. Microcredit’s quixotic mission was to help the poor through profitable lending. Muhammad Yunus, the founder of Grameen Bank and the

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most vocal advocate for worldwide microcredit, won the Nobel Peace Prize in 2006. A true philanthropist and visionary, he has been described as a genius, has appeared on many lists of

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praised him for focusing on women. In 2009, President Obama gave Yunus the Presidential Medal of Freedom and promised an investment of $100 million for microcredit in the Western Hemisphere.47 The Right embraced the bank as a way to address poverty through market principles and self-help without involving governments

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any handouts or subsidies. The loans would make entrepreneurs out of the world’s poor, who would be trained in the art of capital accumulation. Microcredit did not begin or end with Grameen—informal banking institutions have existed for centuries on practically every continent—but Grameen did give the concept new

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legs.49 Today, thousands of institutions worldwide offer “microcredit,” and the term, stretched by overuse, has become almost meaningless. Nonprofits like Kiva connect small-scale “entrepreneurs” in developing countries with small-scale financiers, usually

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from developed countries. Kiva lends small loans at or near 0 percent interest and only lends to verified borrowers with a business plan. Large “microcredit” corporations similar to formalized loan sharks also operate in the Third World. It wasn’t long before the honeymoon with

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microcredit gave way to widespread criticism. With such ambitious aims and universal hype, the metrics were never quite reachable. Microcredit would not, after all, be the cure to poverty. In fact, the data have been “mixed

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” as to whether microcredit has even reduced poverty.50 Additionally, the collective group pressure to repay loans, a critical feature of the Grameen model, became oppressive, leading to duress

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to help the poor turned into a way for big corporations to make money. A 2010 New York Times report described the hand-wringing by microcredit supporters surprised at the direction it has taken: “Drawn by the prospect of hefty profits from even the smallest of loans, a raft of banks

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dominate the field, with some charging interest rates of 100% or more.”53 Yunus himself expressed frustration and said: “We created microcredit to fight the loan sharks; we didn’t create microcredit to encourage new loan sharks.” The article went on to state that the microfinance industry, “with over $60 billion in

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just a business?” asked one industry observer. “At what point do we say we have gone too far?” This is an unfortunate, but predictable scenario. Microcredit certainly started with a mission to help the poor but refused to sacrifice its other bottom line: profit. Formal

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microcredit institutions have not been successful in the United States for a variety of reasons, including our robust and formalized economy and the fact that U.

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United States is not composed of would-be entrepreneurs but rather people who have steady employment and need to respond to an emergency. The major microcredit institution in the United States is Accion USA, but other companies like Kabbage, Square Capital, and PayPal offer microloans.54 Loan sizes in the United

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to be used to start or aid a struggling small business and the terms are slightly higher than credit card loans.55 However, an informal microcredit market in the United States is operating in certain immigrant populations. These “lending circles,” much like the cooperatives of the past, offer a way for

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common social norms.61 Despite the challenges and mixed results, many still cling to the idea that the answer to poverty must be found through microcredit. But microcredit and microinstitutions keep coming up short in meeting macro problems. Large multinational banks meet the needs of the well-off, and the poor are

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and collecting their limited funds. But the fact that Wall Street now owns ShoreBank and a few large corporations control many of the world’s microcredit organizations reveals the limits of the small and the powerless to help themselves while the government helps the banking industry. MARKET INNOVATIONS These market answers

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have involved pressing mainstream banks into lending small-dollar loans, targeting neglected communities through the CRA, or employing grassroots community solutions such as ShoreBank and microcredit. Today, many claim that the answer to banking the unbanked lies in yet-to-be-developed technology. These “disruptive innovators” can use new technology to

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banking services to the poor and middle class, many immediately assume that the solution must be in some form of community banking. This is why microcredit and the ShoreBank model enjoyed broad support and why credit unions are still believed to be the banks for the poor even though their customers

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Insurance Corporation, “What is Economic Inclusion?,” accessed March 19, 2015, www.economicinclusion.gov/whatis/. 98. For example, a central tenet of Professor Muhammad Yunus’s microcredit model is that “credit is a fundamental right.” See, e.g., Randeep Ramesh, “Credit is a Basic Human Right,” Guardian, January 5, 2007, accessed March

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11 (1997): 169, 181–182; Bruce G. Posner, “Behind the Boom in Microloans,” Inc., April 1994, 114. 56. Ivan Light and Michelle Pham, “Beyond Creditworthy: Microcredit and Informal Credit in the United States,” Journal of Developmental Entrepreneurship 3 (1998): 35, 39. 57. Most of these policy efforts have focused on lending

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/now/enterprisingideas/Muhammad-Yunus.html. 44. Rashmi Dyal-Chand, “Reflection in a Distant Mirror: Why the West Has Misperceived the Grameen Bank’s Vision of Microcredit,” Stanford Journal of International Law 41 (2005): 225. 45. Grameen Bank, “16 Decisions,” updated July 15, 2014, “The 16 Decisions of Grameen Bank,” Global Development

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Bank of Kansas City Economic Research Department, 2010, 1, accessed March 15, 2015, www.kansascityfed.org/PUBLICAT/RESWKPAP/PDF/rwp10-11.pdf. 47. Tom Gallagher, “Microcredit Lending: An Alternative to Payday Loans for the Working Poor,” National Catholic Reporter, August 21, 2009, 27. 48. As late as 2008, this bipartisan support

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Grameen Bank that the U.S. public has imported is at best incomplete and at times quite disputable.” Dyal-Chand, “Distant Mirror,” 24. In 1997, Microcredit Summit was held with the goal of eliminating poverty worldwide by the year 2025. Ibid., 235; “The empirical evidence on the impact of micro-credit

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): 299; “Despite its overwhelming success in reaching the poor, induced benefits of microfinance … are debated.” Shahidur R. Khandker and Hussain A. Samad, “Dynamic Effects of Microcredit in Bangladesh,” World Bank Development Research Group Agriculture and Rural Development Team (2014), 2. 51. Fishman, “Microfinance,” 603. 52. Dyal-Chand, “Distant Mirror,” 242, no

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14, 2010, accessed March 15, 2015, www.nytimes.com/2010/04/14/world/14microfinance.html?pagewanted=all&_r=1&. 54. For a tool to explore microcredit entities in the United States, see FIELD at the Aspen Institute, “microTracker,” microtracker.org/explore; “10 Top Microfinance Companies,” CNN Money, updated July 15, 2011

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–151; small, 152–153, 172, 176, 215, 216, 287nn61,63; subprime loans, 156, 157, 158–159, 160, 288n75; liar loans, 159; no doc loans, 159; microcredit, 169–173; social pressure to repay, 171; small business, 179, 301n83; small loans, 215. See also lending Loan sharks, 65, 94–95. See also alternative

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by regulators, 57–58; branching limitations affecting, 146; circumventing prohibition of, 147 Mexico, 172, 176 Meyer, Eugene, 308n110 Meyer, George V. L., 198, 199–200 Microcredit, 162, 169–173, 245n98, 295–296n48, 296nn49,50 Middle class: reliance on alternative financial instruments, 1; banking for, 64; creation of, 110; blamed for financial

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savings and loans, 91; vs. public good, 101; of payday lenders, 132; of noncommunity banks, 146; of CDFIs, 168; of lending to poor, 168; and microcredit, 172 Progressive Movement, 86, 87 Provident Institution for Savings, 79 Provident Loan Society, 67, 270n53 Proxmire, William, 50, 154 Public: banks’ lack of responsibilities to

Confessions of a Microfinance Heretic

by Hugh Sinclair  · 4 Oct 2012  · 346pp  · 101,763 words

derailed by the same mindless pursuit of financial gain that caused the global financial crash of 2008. It is essential reading for anyone involved in microcredit and for all who are committed to ending global poverty and injustice. For some twenty years we have heard the story that

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microcredit is the cure for global poverty: An amazing visionary economist in Bangladesh named Mohammed Yunus founded the Grameen Bank and demonstrated a simple, effective way

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, of fulfilling its promise to end poverty. Indeed, as Hugh Sinclair spells out in detail, many microcredit programs are nothing more than predatory lending schemes rebranded as socially responsible investment opportunities. There are effective microcredit programs. Sinclair describes one in Mongolia that truly serves the poor with low-cost loans used to

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a 2011 New York Times op-ed. He noted that when he founded Grameen Bank in Bangladesh in 1983, “I never imagined that one day microcredit would give rise to its own breed of loan sharks. But it has.” Some of those responsible for the corruption of a noble idea may

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make the amazing claim that high interest rates are a rich people’s concern. They don’t matter to the poor. To benefit the poor, microcredit need only offer lower interest rates than local money lenders. Those who work in microfinance commonly view the system from the perspective of the investor

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rather than that of the community and thereby lose sight of the bigger picture. Tara Thiagarajan, chairperson of Madura Micro Finance, a for-profit microcredit program in India, is an all-too-rare exception—as revealed in her insightful May 2, 2010, blog: The local moneylender … may charge a higher

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even greater. The same dynamic plays out at national and global levels. Suppose that an investor in the United States invests in one of the microcredit programs in India described by Sinclair. The investor provides loan or equity financing in U.S. dollars and expects payment of interest and dividends in

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accomplices. Grameen Is a Bank The key to fixing microfinance is to recognize the critical differences between the Grameen Bank and the vast majority of microcredit institutions that claim to be its replicas. • Grameen is similar to what Sinclair calls a “regular” bank. Its lending is mostly self-funded by local

…

its flaws, as does every institution, but it is designed to be locally accountable and to build rather than expropriate community wealth. Most of the microcredit programs that claim to replicate the Grameen model resemble it only in the fact that they make loans to poor people. They are not “real

…

attractive proposal than handing out free food. Bono summarized this succinctly: “Give a man a fish, he’ll eat for a day. Give a woman microcredit, she, her husband, her children and her extended family will eat for a lifetime.”9 The general public was ready for a new approach to

…

development. Thus after extensive campaigning, the UN declared 2005 as the year of microcredit, and the following year it gained its ambassador. Muhammad Yunus received the Nobel Peace Prize, and microfinance stepped onto the main stage. It was now

…

tip of the iceberg. A subtle shift had occurred in the microfinance sector that Mohammad Yunus himself pinpointed perfectly: “I never imagined that one day microcredit would give rise to its own breed of loan sharks.” A key problem in the sector is the distance, not simply physical, between the poor

…

of the companies leading the sector. An article in Time World summarized it succinctly: “On current evidence, the best estimate of the average impact of microcredit on the poverty of clients is zero.”10 To highlight the unusual range of opinions, contrast this with the conclusion drawn by two-time Pulitzer

…

-winning New York Times columnist Nicholas Kristof: “Microcredit is undoubtedly the most visible innovation in anti-poverty policy in the last half century.”11 In my opinion the truth is likely closer to

…

every count my assumptions were wrong. World Relief had been an interesting error, but I would later learn it was not typical of all religious microcredit organizations. I worked for another large Christian microfinance network some years later and found the precise opposite—an effective, ethical group of institutions, charging reasonable

…

properties of a $100 loan to eradicate poverty. Who were we to dispute this new developmental religion? In 2006 I had attended the quadrennial Global Microcredit Summit, held that year in Halifax, Nova Scotia. This is a massive gathering of insiders who applaud one another and pat each other on the

…

the activities per se, but on the source of the funding. The Times article went on to quote Muhammad Yunus: “We created microcredit to fight the loan sharks; we didn’t create microcredit to encourage new loan sharks,” Mr. Yunus recently said at a gathering of financial officials at the United Nations

…

. “Microcredit should be seen as an opportunity to help people get out of poverty in a business way, but not as an opportunity to make money

…

sector, and yet his advocates rarely progressed beyond paying lip service to his dream. Yunus abhors extortionate interest rates (“I never imagined that one day microcredit would give rise to its own breed of loan sharks”), and yet evidence of such practices is common across the entire sector. His dream was

…

microfinance. Perhaps Bono’s original quote should be rephrased: Give a man a fish, and he’ll eat for a day. Give a woman a microcredit loan to buy a fishing boat, and the CEOs of the MFI and the microfinance funds will eat for a lifetime. There is too much

…

for handicapped clients, clients with HIV/AIDS, and young entrepreneurs, who receive free business coaching. It is one of the few MFIs to distinguish between microcredit loans (for productive uses) and consumption loans, the latter consisting of only 10 percent of its portfolio. It focuses on the poorer communities, with loan

…

on the website for Confessions of a Microfinance Heretic: www.microfinancetransparency.com. Chapter 1 Thou Shalt Not Criticize Microfinance 1. According to the 2011 Global Microcredit Summit, 205,314,500, of whom 153,306,542 are women. See http://www.microfinancegateway.org/p/site/m/template.rc/1.26.17926/. 2

…

.s3.amazonaws.com/Kiva_Form_990_-_2010.pdf. 16. Steve Beck and Tim Ogden, “Beware of Bad Microcredit,” Harvard Business Review, September 2007; summary available at http://hbr.org/2007/09/beware-of-bad-microcredit/ar/1. 17. David Lascelles and Sam Mendelson, Microfinance Banana Skins 2011: The CSFI Survey of Microfinance

…

Institute’s “Institution Building Across Borders” research group, http://governancexborders.com/2011/10/08/that-evil-evil-microcredit-documentary-on-tour/. Appendix Microfinance Economics 101 1. Steve Beck and Tim Ogden, “Beware of Bad Microcredit,” Harvard Business Review online (September 2007). 2. See Michael Chu’s presentation to Canning House, April 24

…

, 60 problems at, 33–34, 38, 55–56, 60–61 Ford Foundation, 157 Friends of Grameen, 209–11, 218 Fundenuse, 197 G Givewell, 184 Global Microcredit Summit, 128–29 Gokhale, Ketaki, 203 Google Inc., 175 Graber, Ken, 63, 64 Grameen Bank, 2, 8, 17, 84 criticism of, 208–10 interest rates

Randomistas: How Radical Researchers Changed Our World

by Andrew Leigh  · 14 Sep 2018  · 340pp  · 94,464 words

care for a baby doll that’s programmed to demand attention at all hours. •After-school programs are a great way to help troubled youths. •Microcredit can solve world poverty. •If you want people in developing countries to sleep under a bed net to prevent insect-borne disease, don’t just

…

for an infant simulator for a week were twice as likely to become teenage mothers.13 Many after-school programs have no measurable impact. Rigorous microcredit studies have found it makes only a small impact. Free distribution of bed nets massively increases take-up. Sometimes randomised trials do confirm conventional wisdom

…

recounts, they repaid the loan and their businesses became more profitable. So he set up a bank to provide ‘microcredit’ – loans as small as a few dollars. Fast-forward two decades, and microcredit was among the hottest trends in development. Yunus’s Grameen Bank had grown into a multi-billion-dollar organisation

…

. The prime minister of Bangladesh argued that microcredit would ‘allow the world’s poorest people to free themselves from the bondage of poverty and deprivation to bloom to their fullest potentials’.9 Internationally

…

, microcredit won supporters from the left for its focus on poor women and from the right for its emphasis on personal responsibility. A pair of supporters

…

of picking one tool, one movement with the goal of emancipating the poorest women on earth, the microcredit phenomenon wins without serious competition.’10 As US president, Bill Clinton provided development assistance to microcredit programs and championed Muhammad Yunus for the Nobel Peace Prize.11 Awarding the prize to Yunus in 2006

…

important instrument in the struggle against poverty’. U2’s Bono wrote: ‘Give a man a fish, he’ll eat for a day. Give a woman microcredit, she, her husband, her children, and her extended family will eat for a lifetime.’12 Yet it turned out that the bold claims for

…

microcredit were largely based on anecdotes and evaluations that failed to distinguish correlation from causation. By the 2000s, researchers had begun carrying out randomised trials of microcredit programs in Bosnia, Ethiopia, India, Mexico, Morocco and Mongolia. Summarising these six

…

experiments, a team of leading development economists concluded that microcredit had no impact on raising household income, getting children to stay in school, or

…

empowering women.13 Microcredit schemes did provide more financial freedom, and led people to invest more money in their businesses, but

…

it didn’t make them more profitable. Part of the reason that microcredit struggled to change lives is that it offered relatively small sums of money at high interest rates. Whereas the Nigerian entrepreneurs got to keep their

…

YouWiN! prizes, microcredit borrowers had to pay back their loans with interest rates that sometimes exceeded 100 per cent. Microcreditors defended themselves by pointing out that they were

…

a profit. As Dean Karlan puts it, there just aren’t that many golden-egg-laying geese around.14 As the gloss has come off microcredit, some economists believe that there may be larger benefits from helping people save than from helping them borrow. A survey of recent randomised trials finds

…

Institute of Technology. Through her work at J-PAL, Duflo has been responsible for hundreds of randomised trials, including several in this chapter: business training, microcredit, subsidised anti-malaria bed nets, and vaccination incentives. Duflo’s favourite hobby is rock climbing – a sport that rewards bravery, tenacity and flexibility. So it

…

text messages reminding clients of their goals boosts savings. ATM cards have no impact on women’s savings behaviour. Rainfall insurance makes farmers more productive. Microcredit does not increase the numbers of small businesses. This kind of scorecard approach is not without its critics. One challenge is that combining studies across

…

Fox: An Essay on Tolstoy’s View of History, London: Weidenfeld & Nicolson, 1953. 9Quoted in Abhijit Banerjee, Dean Karlan & Jonathan Zinman. ‘Six randomized evaluations of microcredit: Introduction and further steps’, American Economic Journal: Applied Economics, vol. 7, no. 1, 2015, pp. 1–21. 10Jim Klobuchar & Susan Cornell Wilkes, The Miracles of

…

Intentions: How a New Economics is Helping to Solve Global Poverty, New York: Penguin, 2011, p. 61. 13Banerjee, Karlan and Zinman, ‘Six randomized evaluations of microcredit’. See also Abdul Latif Jameel Poverty Action Lab, ‘Where Credit is Due’, Policy Bulletin, February 2015, available at www.povertyactionlab.org. 14Karlan & Appel, More Than

…

–5, 16 ‘single subject’ trials 168 and single-centre trials 197 and vaccinations 113 see also scurvy treatment trials meta-analysis 85 Miami Herald 60 microcredit 5, 6, 105–6, 121, 123 microtargeting 141 Minchin, Tim, and ‘Storm’ 32–3 Minneapolis Domestic Violence Experiment 90–1 see also Lawrence Sherman ‘modern

23 Things They Don't Tell You About Capitalism

by Ha-Joon Chang  · 1 Jan 2010  · 365pp  · 88,125 words

of entrepreneurial energy at the personal level, but the absence of productive technologies and developed social organizations, especially modern firms. The increasingly apparent problems with microcredit – very small loans given to poor people in developing countries with the pronounced aim of helping them set up businesses – shows the limitations of individual

…

discriminate against them, while the local money-lenders charge prohibitive rates of interest. If they are given a small amount of credit (known as a ‘microcredit’) at a reasonable interest rate to set up a food stall, buy a mobile phone to rent out, or get some chickens to sell their

…

the developing country’s economy, their successes would translate into overall economic development. The invention of microcredit is commonly attributed to Muhammad Yunus, the economics professor who has been the public face of the microcredit industry since he set up the pioneering Grameen Bank in his native Bangladesh in 1983, although there

…

the early 1990s, the success of the Grameen Bank, and of some similar banks in countries such as Bolivia, was noticed, and the idea of microcredit – or more broadly microfinance, which includes savings and insurance, and not just credit – spread fast. The recipe sounds perfect

…

. Microcredit allows the poor to get out of poverty through their own efforts, by providing them with the financial means to realize their entrepreneurial potential. In

…

-respect, as they are no longer relying on handouts from the government and foreign aid agencies for their survival. Poor women are particularly empowered by microcredit, as it gives them the ability to earn an income and thus improve their bargaining positions vis-à-vis their male partners. Not having to

…

poverty is in the museum’. By the mid 2000s, the popularity of microfinance reached fever pitch. The year 2005 was designated the International Year of Microcredit by the United Nations, with endorsements from royalty, like Queen Rania of Jordan, and celebrities, like the actresses Natalie Portman and Aishwarya Rai. The ascendancy

…

to make up for a temporary fall in income due to the illness of a working family member. In other words, the vast bulk of microcredit is not used to fuel entrepreneurship by the poor, the alleged goal of the exercise, but to finance consumption. More importantly, even the small portion

…

goes into business activities is not pulling people out of poverty. At first, this sounds inexplicable. Those poor people who take out microcredit know what they are doing. Unlike their counterparts in rich countries, most of them have run businesses of one kind or another. Their business wits

…

’ made handsome profits – $750–$1,200 in a country whose annual average per capita income was around $300. However, over time, the businesses financed by microcredit become crowded and their earnings fall. To go back to the Grameen phone case, by 2005 there were so many telephone ladies that their income

…

, and the limited amount of finance that they can mobilize through microfinance. So, you, a Croatian farmer who bought one more milk cow with a microcredit, stick to selling milk even as you watch the bottom falling out of your local milk market thanks to the 300 other farmers like you

…

.g., creaming machines) and overseas marketing. In contrast, the dairy sectors in the Balkan countries have failed to develop despite quite a large amount of microcredit channelled into them, because all their dairy farmers tried to make it on their own. For another example, many small firms in Italy and Germany

…

. THING 15 1 OECD, ‘Is informal normal? – Towards more and better jobs in developing countries’, 2009. 2 D. Roodman and J. Morduch, ‘The impact of microcredit on the poor in Bangladesh: Revisiting the evidence’, 2009, working paper, no. 174, Center for Global Development, Washington, DC. 3 M. Bateman, Why Doesn’t

…

106–7 International Labour Organization (ILO) 32, 143–4 International Monetary Fund (IMF) 54–5, 57, 66, 72, 244, 262 SAPs 118 International Year of Microcredit 162 internet revolution 31–2 impact 36–7, 38, 39 and rationality 174 investment brownfield/greenfield 84 foreign direct investment 83–5 share 18–19

The Social Life of Money

by Nigel Dodd  · 14 May 2014  · 700pp  · 201,953 words

economic structure. The idea is useful as a means of exploring the multiplicity of economic arrangements growing up in the present day: “Internet peer production, microcredit arrangements, barter groups, local currency systems, gift-exchange communities, investment clubs, corporate work teams, mutual aid associations, garage sales, and more” (Zelizer 2011: 304). They

…

Levin 2010), and the Sangue, or rotating credit associations (Baptiste, Horst, et al. 2010: 3–4). Besides these, a range of financial service providers, banks, microcredit institutions, and money transfer services operate, albeit unevenly. The picture portrayed in this study is of an extraordinarily complex series of monetary circuits that depend

…

monetary reformists throughout the twentieth century. One recent noteworthy manifestation of mutualist principles has been the microcredit movement, and in particular, the Grameen Bank founded in Bangladesh by Muhammad Yunus in 1976. The principle behind microcredit is to provide loans that would normally be too small for ordinary banks. The idea of

…

group members is tarnished (although other group members are not actually liable for that portion of the loan).16 Besides encouraging collectivism, the principle behind microcredit is that, when compared with charity, lending—within limits—can be empowering. Critics, on the other hand, argue that

…

privatization of welfare, draws many borrowers into a debt trap, and reinforces extant gender inequalities (Rankin 2001; Karim 2008; Faraizi, Rahman, et al. 2010). The microcredit movement (including global organizations such as Kiva) has been enormously successful: solidarity lending now operates in forty-three countries worldwide. The Grameen Bank, principally owned

…

However, microfinance recently underwent a crisis of its own, analogous perhaps to the subprime crisis.18 The problem, to a degree, was one of scale: microcredit was becoming a victim of its own success as new companies were attracted to the system for commercial, rather then ethical, reasons: some of these

…

conduct proper credit checks and lending unrealistic amounts (Wichterich 2012). Having seen growth from 1 to 26.7 million microloans between 2003 and 2009, the microcredit system in India went into meltdown during 2010, amid accusations of predatory lending, excessive interest rates, and coercive collection tactics.19 Inevitably, government intervention has

…

discussion of the moral economy of debt in Chapters 3 and 4, Gregory suggests that as the problems associated with microcredit have emerged, so has the language used to describe it change: microcredit has increasingly become microdebt (Gregory 2012: 394). He writes of Yunus: “Yunus is a village money lender who lends

…

. Evans Pritchard, A. (2012). “Greek Agony Drags on as Asphyxiation Bloc Wins.” The Daily Telegraph (London). June 18. Faraizi, A., T. Rahman, et al. (2010). Microcredit and Women’s Empowerment: A Case Study of Bangladesh, Abingdon, U.K., Routledge. Fenichel, O. (1938). “The Drive to Amass Wealth.” Psychoanalytical Quarterly 7: 69

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Fractures Still Threaten the World Economy, Princeton, NJ, Princeton University Press. Rand, A. (2007). Atlas Shrugged, London, Penguin. Rankin, K. N. (2001). “Governing Development: Neoliberalism, Microcredit, and Rational Economic Woman.” Economy and Society 30 (1): 18–37. Rasmus, J. (2010). Epic Recession: Prelude to Global Depression, London, Pluto Press. Rawls, J

…

eternal return, 12, 140–41, 142, 144, 145, 149, 152, 157, 391 ethics, 228, 380; faux Christian, 389; in Fromm, 337; in Kant, 84; and microcredit, 358; in Simmel, 317, 319–20, 326 ethnography, 295–96 euro, 9, 20, 46, 78–79, 129, 133, 206, 213, 214, 251–66, 268, 270

…

epic recession Greco, Thomas H, 360n greed, 50, 56, 198, 315n, 332, 341, 348 Green, Sarah, 303–4 Gregory, Chris, 298–300, 306, 308; on microcredit, 358n18, 358n20 Gresham, Thomas, 108 Grierson, Philip, 24 Grignon, Paul, 113 Guastella, René, 172n Guattari, Félix, 13, 227–37, 241; on alliance and filiation, 232

…

mental accounting, 290–91 Mephistopheles, 92 mercantilism, 66 Merrill Lynch, 114, 221 Mesopotamia, 95 Messianic time, 335, 338 metallism, 102, 383 Methodenstreit, 285 metropolis, 250 microcredit, 357–58 Midas, 153 migrant workers, 293 migration, 226, 240, 263, 293, 305 mimesis, 43–45; and financial panic, 77 minimum wage, 325, 382 Minsky

Listen, Liberal: Or, What Ever Happened to the Party of the People?

by Thomas Frank  · 15 Mar 2016  · 316pp  · 87,486 words

, she continued; she knew of farmers in Kenya who were using “mobile banking technology” and of “women entrepreneurs” somewhere else in Africa who were getting “microcredit loans” and she also knew about a doctor who used a search engine to diagnose a disease.17 I guess she hadn’t heard about

…

embraced it. Thousands of careers were built on it. Billions of dollars were spent advancing it. The United Nations declared 2005 the “International Year of Microcredit.” Muhammad Yunus, the Bangladeshi economist who popularized microlending, won a Nobel Prize in 2006. Three years later, Barack Obama gave Yunus the Presidential Medal of

…

a speech in the Gaza Strip in front of a sign that reads, “Women’s Empowerment Through Micro Lending.” In 1997 she cohosted a global Microcredit Summit in Washington, D.C., replete with the usual third-world delegations. Hillary’s own remarks on that occasion were unremarkable, but those of the

…

with vast potential,” Hillary Clinton said. “Whether we are talking about a rural area in South Asia or an inner city in the United States, microcredit is an invaluable tool in alleviating poverty, promoting self-sufficiency and stimulating economic activity in some of the world’s most destitute and disadvantaged communities

…

.” The president of the Citicorp Foundation at the time was Paul Ostergard. His remarks are found on p. 21 of “The Microcredit Summit Report,” a booklet dated April 1997 and apparently published by the RESULTS Educational Fund. Hillary Clinton’s remarks are found on p. 29. A

…

pdf of the report may be downloaded here: http://www.microcreditsummit.org/resource/59/1997-microcredit-summit-report.html. 27. Verveer: “Launch of the State of the Microcredit Summit Campaign Report 2011,” March 7, 2011. Otero: “Keynote Address to the Mobile Money Policy Forum,” Nairobi, Kenya, November

…

30, 2010. Hillary herself: Hard Choices, p. 149. 28. On microcredit in Bosnia, see Bateman’s blog post, “A New Balkan Tragedy

…

? The Case of Microcredit in Bosnia,” April 8, 2014. In “From Poverty to Power,” an Oxfam blog post dated April 20, 2011

…

Island and sharing economy and technocracy and infrastructure innovation Massachusetts and rules circumvented by Intel International Math Olympiad International Women’s Day International Year of Microcredit Internet. See also Silicon Valley; technocracy In the Shadow of FDR (Leuchtenburg) investment banks Iran Iraq War Isaacson, Walter It Takes a Village (H. Clinton

…

incarceration McCain, John McCaskill, Claire McChrystal, Stanley McGovern, George McGovern Commission MCI McKinsey firm Mechanical Turk Medicare meritocracy Mexico financial crisis of 1995 NAFTA and Microcredit Summit (1997) microlending Microsoft Miller, Zell Mills, C. Wright minorities Mondale, Walter monopoly Morgan Stanley Morozov, Evgeny Morris, Dick mortgage-backed securities. See also subprime

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