ArticlePDF Available

Abstract and Figures

Microfinance (MF) has grown over the last two decades into an important sub-field of development studies. This special issue of Oxford Development Studies explores the contributions of MF, drawing particularly on research conducted in India. After a brief overview of the emergence of MF as a research field, this introduction develops three themes. First, we argue that MF interventions generally involve, and assume a process of transformation of, financially excluded people and groups who are not fully dominated by the logic of market exchange but have histories, culture, social relationships and politics structured by other kinds of authority and dynamics. Second, we argue that understanding MF interventions at the local level requires the social and political analysis of global development architecture, while MF may also play a role in consolidating or cementing global political economy at its base. Third, we argue that MF interventions have provided fertile ground for research into the causes and consequences of poverty. The introduction ends with summaries of the contents of the special issue.
Content may be subject to copyright.
This article was downloaded by: [the Bodleian Libraries of the University of Oxford]
On: 23 July 2013, At: 11:54
Publisher: Routledge
Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered
office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK
Oxford Development Studies
Publication details, including instructions for authors and
subscription information:
Microfinance Studies: Introduction and
Cyril Fouillet a , Marek Hudon b , Barbara Harriss-White c & James
Copestake d
a ESSCA Business School, LUNAM University , Angers , France
b Universté Libre de Bruxelles, Solvay Brussels School of Economics
and Management , Brussels , Belgium
c Department of International Development , University of Oxford ,
Oxford , UK
d Department of Social and Policy Sciences , University of Bath ,
Bath , UK
Published online: 23 Jul 2013.
To cite this article: Cyril Fouillet , Marek Hudon , Barbara Harriss-White & James Copestake (2013)
Microfinance Studies: Introduction and Overview, Oxford Development Studies, 41:sup1, S1-S16
To link to this article:
Taylor & Francis makes every effort to ensure the accuracy of all the information (the
“Content”) contained in the publications on our platform. However, Taylor & Francis,
our agents, and our licensors make no representations or warranties whatsoever as to
the accuracy, completeness, or suitability for any purpose of the Content. Any opinions
and views expressed in this publication are the opinions and views of the authors,
and are not the views of or endorsed by Taylor & Francis. The accuracy of the Content
should not be relied upon and should be independently verified with primary sources
of information. Taylor and Francis shall not be liable for any losses, actions, claims,
proceedings, demands, costs, expenses, damages, and other liabilities whatsoever or
howsoever caused arising directly or indirectly in connection with, in relation to or arising
out of the use of the Content.
This article may be used for research, teaching, and private study purposes. Any
substantial or systematic reproduction, redistribution, reselling, loan, sub-licensing,
systematic supply, or distribution in any form to anyone is expressly forbidden. Terms &
Conditions of access and use can be found at
Downloaded by [the Bodleian Libraries of the University of Oxford] at 11:54 23 July 2013
Microfinance Studies: Introduction and
ABSTRACT Microfinance (MF) has grown over the last two decades into an important sub-field of
development studies. This special issue of Oxford Development Studies explores the contributions of
MF, drawing particularly on research conducted in India. After a brief overview of the emergence of
MF as a research field, this introduction develops three themes. First, we argue that MF
interventions generally involve, and assume a process of transformation of, financially excluded
people and groups who are not fully dominated by the logic of market exchange but have histories,
culture, social relationships and politics structured by other kinds of authority and dynamics.
Second, we argue that understanding MF interventions at the local level requires the social and
political analysis of global development architecture, while MF may also play a role in
consolidating or cementing global political economy at its base. Third, we argue that MF
interventions have provided fertile ground for research into the causes and consequences of poverty.
The introduction ends with summaries of the contents of the special issue.
1. Introduction
Over the last two decades, microfinance (MF) has expanded into an important sub-field of
development practice and research. At the outset associated primarily with credit for
micro-businesses, MF practice has evolved to include a wider range of financial and
monetary services, offered by a range of institutions, including non-government
organisations (NGOs), savings clubs, building societies, credit unions, cooperative banks,
commercial banks and insurance companies (Zeller, 2006). They have in common the
extension of services to people previously considered un-bankable due to the high-
transaction costs of reaching them, low-operating margins, the perceived risks of loans
and lack of borrowers’ collateral (Harper, 2003). Demirguc-Kunt & Klapper (2012)
estimate that 2.5 billion working-age adults (more than half the world’s adult population)
still have no access to financial services delivered by regulated financial institutions.
q2013 Oxford Department of International Development
Cyril Fouillet (corresponding author), ESSCA Business School, LUNAM University, Angers, France. Email: Marek Hudon, Universte
´Libre de Bruxelles, Solvay Brussels School of Economics and
Management, Brussels, Belgium. Email: Barbara Harriss-White, Department of International
Development, University of Oxford, Oxford, UK. Email: James Copestake,
Department of Social and Policy Sciences, University of Bath, Bath, UK. Email:
Oxford Development Studies, 2013
Vol. 41, Supplement, S1–S16,
Downloaded by [the Bodleian Libraries of the University of Oxford] at 11:54 23 July 2013
Financial inclusion has developed as a unifying global goal of MF: working towards
universal access to financial services that help people not only to save and invest but also
to manage risk and protect themselves from economic shocks (Armenda
´riz & Morduch,
By aiming to improve access to regulated financial services, MF practitioners have often
defined their role in opposition to the informal or unregulated services that poor people
would otherwise depend upon. In contrast, many MF researchers have challenged the
tendency to draw sharp and normative distinctions between formal and informal, regulated
and unregulated or modern and traditional financial services. Instead they emphasise
diverse, complex and multifaceted forms of interconnection; appropriation; accommo-
dation; reconfiguration and struggle between financial institutions, which belie simplistic
conceptualisations of financial dualism (e.g. Morduch, 1999; Gue
´rin & Servet, 2004;
Keating et al., 2010; Taylor, 2012). The concept of “financial landscapes” both reflects this
critique and emphasises the importance of links between financial services and other
aspects of social relations, including labour market status, gender, religious affiliation,
class, trust and relations of reciprocity (Bouman & Hospes, 1994). It is to this dialogue
between MF as a development intervention and as one part of a more complex institutional
landscape that the papers in this special edition contribute. Section 2 locates research into
MF in its historical perspective. Section 3 explores the role of an interdisciplinary
development studies perspective to achieving a fuller understanding of the “economic”
trajectories of individuals and collectives engaged in MF projects and processes. Section 4
outlines recent theoretical perspectives that draw on cross-disciplinary sources to locate
MF within the global development architecture. Section 5 outlines the contribution of MF
studies to understanding the relationship between MF and poverty reduction. Section 6
introduces the other papers in this special issue of Oxford Development Studies.
2. A Historical Perspective on MF Research
While the term MF is relatively new, the underlying concept is not. There are similarities,
for example between contemporary microfinance institutions (MFIs) and the pioneering
German credit cooperatives of the second half of the 19th century (Guinnane, 2011). MF
did not suddenly emerge in the middle of the 1990s with the book Finance against Poverty
published by Hulme & Mosley (1996), or through the work of Muhammed Yunus and the
Grameen Bank in Bangladesh. Literature linking development of retail financial services
with poverty and development also goes back over a century; one early example is work by
Le Play and followers such as Engel (who had been his student at the Paris Ecole des
Mines) on the circulation of money and debt, based on the analysis of household level
monetary and financial practices. By living with, or near, respondent families for weeks at
a time, Le Play developed the concept of a family budget (Ducpetiaux, 1855; Le Play,
1855; Dieterici, 1857; Baxter, 1860; Cottereau & Marzok, 2011). This body of research
embedded what we now call MF in its wider economic, social and political context—both
local and national. There is also a close parallel between Le Play’s observing, recording,
counting, measuring and quantifying of household activities, and contemporary research
into how poor people in developing countries manage their money (Harriss, 1983; Von
Pischke et al., 1983; Rutherford, 2000; Gue
´rin, 2006).
This earlier tradition finds an echo in the widely cited work of Collins et al. (2009), who
collected financial diaries of the daily financial transactions of 300 poor families in South
S2 C. Fouillet et al.
Downloaded by [the Bodleian Libraries of the University of Oxford] at 11:54 23 July 2013
Africa, Bangladesh and India over a full year. To understand how these families managed
their cash on a daily basis, household heads were asked to record the source and use of
every transaction involving cash in a financial diary. This body of work gives a unique
insight into the complexity of contemporary monetary and financial practices. Zelizer
(1989), another exponent of this approach, develops thick descriptions of a set of multiple-
monies and of the changing social meaning and structure of money, from which she
concludes that people possess an enduring capacity to resist attempts to have standardised
and uniform monetary practices imposed on them.
Another strand of MF “pre-history” that influenced the study of development in the
1970s was the field-based analysis of Rotating Savings and Credit Associations
(ROSCAs). This research was developed, among others, by the economists Seibel (1967,
1970), Seibel & Massing (1974), Radhakrishnan (1975, 1979), Bouman (1977) in dialogue
with anthropologists, notably Bascom (1952), Little (1957), Geertz (1962), Ardener
(1964), Soen & Comarmond (1972), and Wu (1974).
However, development policymakers did not make much use of this research to design
credit schemes and programmes. In particular, the Bretton Woods family of institutions
mainly supported state-led development banking models. These came under increasing
attack both from neo-liberals, for promoting bureaucratic inefficiency and undermining
private financial services (e.g. Von Pischke et al., 1983), and from the left for reflecting
Western concepts of rationality expressed in modernisation theory (Escobar, 1995, p. 48).
The expansion of MF as an area of practice as well as research made rapid strides in the
21st century.
The emergence of MF as a contemporary research field can be illustrated by
the trend in the number of publications devoted to it. We conducted this analysis through a
review of the major online academic databases in social sciences, identification of the
number of papers discussing MF and an analysis of their content.
This is shown in
Figure 1. From a plot of the sheer number of publications on MF it can be seen that MF has
evolved as a sub-field of research grounded in economics and management but extending
also into other disciplines. Scientific conferences and meetings about MF also gathered
pace after the first Microcredit Summit Campaign in 1997. A search of the contents of
titles, keywords and abstracts of research papers identified 6411 items for Worldcat, 1602
for Repec, 749 for ISA Web Knowledge and 637 for Econlit. This reflects both growing
content, as well as general growth in academic publications, and also the fact that
researchers hardly used the term MF before the 1990s. Before then, research on what is
now termed micro-finance was variously linked to themes such as informal finance, rural
credit, small farm finance or finance for small and micro businesses, enterprises and firms.
Perhaps the most influential early paper explicitly using the term MF was published by
Jonathan Morduch in 1999 in the Journal of Economic Literature. This helped legitimise
micro-financial research as a genre, particularly among economists. In this detailed and
scholarly article, Morduch introduced both theoretical and empirical literature and
identified the characteristics of a set of theoretical models which distinguish MF from
“traditional” banking activities (including use of group loans and dynamic incentive
). This review, supplemented by a further essay published in World
Development (Morduch, 2000), and a critical paper by Woller et al. (1999) also helped to
constitute a nucleus of ongoing theoretical debates about MF. Morduch (2000, p. 617) drew
a sharp distinction between on the one hand MFIs’ pursuit of financial self-sufficiency
(involving a reduced dependence on subsidies, even if not aiming for full commercial
profitability) and on the other attempts to achieve a progressive social impact, including
Microfinance Studies S3
Downloaded by [the Bodleian Libraries of the University of Oxford] at 11:54 23 July 2013
poverty reduction and redistribution. This was also linked to a schism in the literature
between those working on MF with perspectives emphasising “business first” and the
development of financial systems, and those working on MF with the objectives of poverty
reduction and/or “development first” (Gravesteijn & Copestake, 2010). If we look at the
most cited papers in the ISI Web of Knowledge
the economic impact of MF seems to
dominate MF debates. The most cited article in the MF literature is the study of the impact of
group-based credit programmes on poor households in Bangladesh by Pitt & Khander
(1998, cited 170 times). Impact assessments also feature among the most cited articles by
Hulme (2000, cited 26 times), Copestake et al. (2001, cited 21 times), Kabeer (2001, cited
88 times), Mayoux (2001, cited 50 times) and Amin et al. (2003, cited 33 times). We also
find widely cited papers on the role of MF in developing new forms of economic
domination, mainly over women, through the imposition on borrowers of intense pressure
for timely repayment (Fernando, 1997, cited 21 times; Rahman, 1999, cited 83 times). This
exceeds citation rates for papers on the topic of group liability and borrower empowerment,
despite the emphasis on these issues in early literature about MFIs. Drawing on
ethnographic research, Rankin (2001), for example (cited 88 times), describes how women
borrowers became the target of an aggressive “self-help” approach to development. Taking
the case of Nepal, Rankin argues that through the financial and technical support of
international organisations, MF programmes have re-scaled state power to the local level.
By lending microcredit to groups of women borrowers, MF simultaneously requires
individual responsibility and a direct role for the state in improving access to credit. The role
Figure 1. Growth in the number of publications devoted to MF in Repec, Econlit, ISI Web
Knowledge and Wordcat, 1986 to 2011.
S4 C. Fouillet et al.
Downloaded by [the Bodleian Libraries of the University of Oxford] at 11:54 23 July 2013
of subsidies in MF has also generated substantial debate (Morduch, 1999), which is
discussed further below.
3. Understanding the Economic Trajectories of Groups and Individuals Engaged in
Development Projects and Processes
Comparative studies on the interplay of group dynamics with individual agency, with
which MF projects are identified, have yielded insights of wider relevance to the study of
development. Research on group dynamics in MF has drawn on a range of perspectives in
economics, sociology and gender studies. One important stream of group dynamic models,
associated with Stiglitz (Stiglitz & Weiss, 1981; Stiglitz, 1990), showed how a group
structure could solve problems of asymmetry of information and moral hazard, and why
and how joint liability group lending could improve the repayment rate of MF programmes
(Cassar et al., 2007). Jointly liable for the loan, group members are encouraged to monitor
each other’s socioeconomic decisions such as investment or consumption, thereby
reducing monitoring costs by the MFI and mitigating moral hazard. Other significant
contributions examined the impact of heterogeneity of group members on group dynamics
(Ghatak, 1999; Gangopadhyay et al., 2005; Hermes et al., 2005).
As a form of development intervention MF schemes involve a process of transformation
of previously “financially excluded” people, including women, who are not fully
incorporated into practices of market exchange but who have histories, culture and social
relationships structured by other kinds of authority and dynamics. So MF studies have
embraced interdisciplinary approaches better to explain the varied economic trajectories
of groups and individuals engaged in MF projects and other micro-financial processes. In
the fusion of MF with feminist research and activism, women’s participation in credit
programmes is argued to produce not only new income generation but also to generate
social benefits and skills (Sen, 1999, p. 201). Many empirical papers confirm the
empowerment of members of groups, the most recent being Ravi & Rai’s (2011), who
analyse a project related to mandatory health insurance and find that non-MF-borrowers
are disempowered relative to borrowers.
In many cases, however, simple participation in a group has been used as a proxy for
empowerment and assumed to generate social capital
(Rankin, 2002). Other MF research
has shown that access to financial services does not inevitably empower women. The
decision-making process, one key dimension of empowerment, has been discovered to
shift in favour of women only if financial services are combined with long-term group
membership, social group intermediation (within groups and between groups and lending
and intensive training and group meetings about a range of social and
development issues (as reviewed by Holvoet, 2005).
MFIs have focussed on women not only because they have been regarded as more
reliable partners in utilising credit to advance household well-being, but also because
formally regulated financial institutions are so widely reported to favour men (Armenda
& Morduch, 2010; Johnson & Nino-Zarazua, 2011). While loans to women might improve
equity (since women face access restrictions in non-agricultural labour markets as well as
in finance), investments using MF loans tend to be confined to sectors with lower profits
and growth potential and with harsher competition (Fernando, 2006; Weber, 2006; Gue
et al., forthcoming). Sociologists and anthropologists have also reported tensions in groups
(Rahman, 1999; Rankin, 2001, 2002; Wright, 2006; Moodie, 2008) or an increase in
Microfinance Studies S5
Downloaded by [the Bodleian Libraries of the University of Oxford] at 11:54 23 July 2013
inequalities among women (Mayoux, 2001; Pattenden, 2010). For example, in the
Dharwad district in Karnataka, Pattenden finds that existing economic and political
inequalities are reproduced and even widened within groups. He shows how labouring
women who default on their weekly savings with the group may be fined and ridiculed in
public by members of upper classes and castes. There are many reasons why tensions can
appear in groups; they are often shaped by pre-existing class and caste positions and
relations. Incentives to participate, for example, can be very different for poorer group
members, who see small loans as a strategy to avoid borrowing from moneylenders, than
for richer members, for whom groups provide opportunities for accumulating interest from
informal lending to poorer members. More broadly, the lack of collective training or of
technical support to joint-liability groups does not create incentives or help to solve
problems such as those arising from deficient livelihood opportunities or lack of
transparent relations of group accountability.
A few scholars have turned to theoretical models to analyse women’s empowerment
through MF. Ngo & Wahhaj (2012) for instance create a household production model that
predicts empowerment under certain conditions; first if there is scope for investing the loan
profitably in a joint activity, and second if a large share of the household budget is also
devoted to joint household public goods.
The focus on women has shed light on successes and failures in MF projects in relation
to women’s empowerment. Yet some features of MF methodologies have been regularly
criticised in the gender studies literature. Field research has revealed that microcredit puts
additional burdens on women’s shoulders. For example, Goetz & Sen Gupta (1996)
famously reported that only a minority of loans granted to women were either fully or
significantly controlled by them.
Group intermediation was often established to lower the
lender’s transaction costs, without any consideration of local social relations or of
solidarity or collective pressure. Group lending among women has also been questioned
because of the exclusion of male relatives. Leach & Sitaram (2002) studied an MF project
targeting scheduled caste women working in the silk-reeling industry in India and
highlighted the negative consequences of excluding male relatives from playing any
formal role. Male relatives may, for example, refuse women the support they need for the
development of their businesses or they may actively sabotage their activities. Garikipati
(2008), deploying loan-use data and borrower-testimony in rural India, reveals that loans
procured by women are often diverted into enhancing household assets and income under
the control of men.
Several authors observe and describe the complexity and diversity of women’s informal
financial practices (Johnson, 2004; Gue
´rin, 2006; Gue
´rin et al., 2011; Johnson & Nino-
Zarazua, 2011). Given that women’s needs are not homogeneous and evolve over time,
they call for more flexible financial products to cope with their changing needs. Recent
cases of over-indebtedness (Schicks, in this issue) have also shown the implications of
credit also being debt: vulnerable clients with unstable incomes are particularly exposed to
actively pauperising “over-indebtedness” (Gue
´rin et al., forthcoming). When the terms
and conditions of loans turn out to prevent repayment, MF not only has counter-productive
economic effects but also reduces the durable social networks, social status and
acquaintance of clients unable to repay. Moreover, women may face discrimination by MF
loan offices. Analysing the portfolio of a Brazilian MFI, Agier & Szafarz (2013) find
different treatment with regard to credit conditions, the gender gap in loan size increasing
disproportionately the larger the borrower’s project. Moreover, several cases of bad
S6 C. Fouillet et al.
Downloaded by [the Bodleian Libraries of the University of Oxford] at 11:54 23 July 2013
treatment of borrowers have shown that the provision of financial services is also a socially
sensitive business and not systematically associated with the empowerment of clients.
Based on ethnographically informed studies of women’s experiences, Brett (2006)
examines the hidden costs of MF participation, processes of over-indebtedness and the
social and structural institutions shaping women’s search for finance and their acceptance
of debt beyond their capacity to repay.
So, most recent analyses grounded in fieldwork have reached cautious conclusions
about the impact of MF on poverty and empowerment. Certainly MF has triggered public
awareness of the advantages of group interactions as a principle of development policy
and practice. The World Bank’s 2008 World Development Report on agriculture, for
example, contains a strong case for producers’ organisations that can channel MF.
Nevertheless, recent research has also concluded that group intermediation needs careful
design to match the specific needs and conditions of clients. This body of work suggests
that group intermediation should not be used as an end in itself but as part of a bundle of
local policy tools.
Partly because of emerging tensions within groups, individual lending has been
increasingly promoted under MF, so some scholars have analysed the effect on
empowerment resulting from MF services that are not delivered in groups. For instance,
Ashraf et al. (2010) analyse the access and marketing of savings products and find signs of
social and political empowerment particularly when women have below median decision-
making power in the baseline period. They find this leads to a shift towards the purchase of
“female-oriented” durable goods. But literature from the feminist-MF fusion suggests that
the jury is still out on best practice in MF for the empowerment of women.
4. MF as Part of Global Development Architecture
Recent theoretical perspectives that draw on trans-disciplinary sources and relate the
discipline of international relations and the macro-field of global economic governance to
the micro-field of MF have advanced a social and political analysis of a global
“development architecture” in which MF is crucial to its political-economic consolidation
at the base. Historically, MF was expanded at the same time as a worldwide wave of
privatisation and a growing hegemony of neo-liberal ideas about development [Fernando,
2006; Fouillet et al., 2007; Bateman, 2012; and see the Bolivian (Servet, 2006), Indian
(Pattenden, 2010) and Egyptian cases (Elyachar, 2005, 2008)]. Weber (2002) in particular
has argued that massive layoffs resulting from privatisation and state downsising generated
the need for small-scale credit facilities to support the self-employment that frequently
results from such development trajectories. She further argues that MF has facilitated
financial sector liberalisation, in so far as it functions as a safety net which dampens local
resistance to neo-liberal policies. Similarly, Fernando (2006) considers that the “popularity
of MF demonstrates the remarkable capacity of capitalism to use the languages and
criticisms of its opponents to secure the conditions for its reproduction” (p. 31).
The pioneers of MF development practice were non-governmental organisations
(Mersland & Strøm, 2010). But in the 21st century commercial banks developed interests
in MF and many micro-enterprise-lending NGOs have also transformed themselves into
for-profit organisations, regulated either as intermediaries with links to non-financial
development institutions or as full-fledged banks. The first transformation occurred in
1992 with BancoSol in Bolivia.
Microfinance Studies S7
Downloaded by [the Bodleian Libraries of the University of Oxford] at 11:54 23 July 2013
As commercial enterprises, MFIs pay taxes and are subject to local monitoring and
enforcement of regulations. Since many MFIs started as NGOs or in informal activities,
commercial operations represent a major transformation of their business model. This
change is reported frequently to generate tensions among MFI staff who were originally
recruited for a subsidised, social-support and developmental objective.
The transformation from informal non-profit to regulated and more commercially
oriented status is not confined to MF. Other development organisations have also formally
adopted a “social enterprise” model with multiple goals including the so-called “double
bottom line” of financial sustainability and development (e.g. Gravesteijn & Copestake,
2010). As a sector originally seen as part of the social economy which is currently
integrated into national and global markets, MF is an emerging example of institutional
hybridisation, of special interest to scholars of organisations and business (Battilana &
Dorado, 2010). While commercial transformation was regarded as a logical step both to
expand outreach to clients and to achieve greater “professionalism” (Ledgerwood &
White, 2006), it is only a small minority of MFIs that have transformed. The process has
often been difficult to implement or long-delayed, some managers of MFIs simply refusing
to engage with commercialisation.
This process also refuelled an historical debate in MF related to the mission drift of MFIs
(Copestake, 2007; Armenda
´riz & Szafarz, 2011). When banks or non-banking financial
institutions recruited new actors as shareholders, the question arose whether the
hybridisation and commercial objectives shifted the market for MF away from the original
developmental constituencies of poor, less profitable and more risky clients. Augsburg &
Fouillet (2010) analyse the roles international organisations play in diverting MFIs from
their primary objective of delivering financial services to the poor. Illustrating their
argument from Andhra Pradesh, the authors show that such a push had severe consequences,
ranging from mission drift to legally questionable and oppressive practices. Lending targets
for some MFIs increased tremendously, leaving credit officers with the task of reaching too
many clients in too short a time. To meet such targets, clients were persuaded to repay
current debts by taking out new and bigger loans. On being sanctioned, in many cases only
80% of the amount was actually disbursed. The remainder was kept as a security deposit,
without documentation, but with members expected to repay the whole amount. Further,
authors describe how the MF crisis in Andhra Pradesh reflects a frenzy of private and public
actors driven by motives unrelated to a “fight against poverty” (Reddy, 2012). Instead MF
emerged as a new commercial niche for private actors, challenging the role of early state-led
models as a source of patronage for political brokers and politicians. Placing MF in a wider
context of expanding indebtedness, Taylor (2011) shows how the expansion of MF did not
simply provide credit to financially disenfranchised people, as policy accounts imply, but
instead served to rework and consolidate existing debt relationships.
In this section, we have seen that MF has frequently emerged in the context of state
programmes of privatisation and that many MFIs subsequently shifted to commercial
structures and funding. The full impact of the shift to a commercial structure or funding is
still to be determined and is a priority for future research.
5. MF and Poverty Reduction: Debate about Impact Evaluation
As noted in Section 2, the impact of MF has been the subject of sustained debate.
Moreover, the reliability of micro-level studies of its impact on poverty has been
S8 C. Fouillet et al.
Downloaded by [the Bodleian Libraries of the University of Oxford] at 11:54 23 July 2013
questioned (e.g. Banerjee et al., 2009). The most widely cited study by Pitt & Khandker
(1998), using data for 1991 1992, estimated that every 100 taka lent to a woman provided
an additional 18 taka to the household budget. By contrast, in a well-received study on the
poverty impact of MF in North-eastern Thailand, Coleman (1999) found little impact on
borrowers and even increases in money-borrowing and in women falling into vicious
circles of debt.
The results of these and other impact studies have been challenged because of selection
biases in the samples and problems of endogeneity (Armenda
´riz & Morduch, 2010). MF
clients have characteristics that are difficult to control for in experimental design in non-
laboratory conditions, and which therefore create bias. As a result of such criticism, a new
methodology has been proposed based on experiences in health, agricultural research and
US social policy—the randomised control trial (RCT). Researchers using RCTs argue that
if one wants to evaluate the impact of a programme, the impact on recipients (the
“treatment group”) needs evaluating against the counterfactual of those not receiving it
(the “control”) (Karlan & Goldberg, 2010). Since 2005, several impact studies using RCT
have been launched. But while the results of pre-RCT impact studies of MF are mixed, so
are those based on RCTs. A review of the evidence commissioned by the UK-aid agency
DFID concluded that up to 2011 only two RCTs were devoid of methodological problems
(Duvendack et al., 2011).
MF RCTs often lack proper randomisation of MF allocation
and/or double blinding (Duvendack et al., 2011). The two most methodologically robust
RCTs find little direct impact on well-being. The first, Banerjee et al. (2009), analyses a
sample in the slums of Hyderabad, India and concludes that there is “no effect of access to
microcredit on average monthly expenditure per capita, but expenditure on durable goods
increased in treated areas and the number of new businesses increased by one third” (p. 1).
The second, by Karlan & Zinman (2009) using data from applicants for consumer credit in
the outskirts of Manila, finds that MF borrowers, if male, appeared to shrink their
businesses while increasing profits. They also increased their access to informal credit “to
absorb shocks” and substituted informal for formal insurance.
Doubts about the role of MF in poverty reduction have been prompted not only by the
limited evidence but also by cases of its use to extract extraordinary profits. The leading
example was the initial public offering of the Mexican MFI Compartamos (Cull et al.,
2009). In April 2007, 30% of its existing shares were sold at 12 times their book value to
new investors, providing existing shareholders a net profit of about $460 million.
Beneficiaries included the NGO ACCION, the International Finance Corporation and
private individuals. Accusations that poor people paying very high interest rates were
sacrificed for rich investors proliferated (see for example Ashta & Hudon, 2012). This and
subsequent cases have rekindled debate over the commercial and development objectives
of MFIs (Pache & Santos, 2010, p. 4), as well as the scope for more explicit balancing of
the two through improved “social performance management” (Copestake, 2007).
6. The ODS Special Issue
This special issue of Oxford Development Studies offers a range of contributions to
MF studies informed by a broad and multidisciplinary perspective, focusing mainly
on India.
Calling for more a contextual approach to researching MF, James Copestake proposes
the framework of “well-being regimes” (Gough & McGregor, 2007; McGregor et al.,
Microfinance Studies S9
Downloaded by [the Bodleian Libraries of the University of Oxford] at 11:54 23 July 2013
2007). His paper, “Research on MF in India: Combining impact assessment with a broader
development perspective” defines development broadly to encompass research into MF
both in development and for development. After providing an historical overview of rural
finance in India, Copestake explores four long-term drivers of MF: evidence-based policy;
rising political aspirations; digital technology and climate change. The paper’s conclusion
reflects on the difference between policy-driven impact assessment of MF and broader
policy-relevant research, emphasising the need to ensure that the first does not crowd out
the second. Policy discourse is central to the history of development studies. Susan
Johnson’s paper, “From MF to inclusive financial markets: The challenge of social
regulation”, addresses the shift from a focus where MFIs were understood as a tool to serve
poor people, to a financial market development perspective. There are two parts to her
argument. The first concerns the disjuncture between the discourse of financial inclusion
and its analysis. Financial inclusion involves “making markets work for the poor”, but
Johnson shows how this agenda has not emerged from the focus on the “enabling
environment” of the post-Washington Consensus. Rather it results from the analysis of the
causes of exclusion or the negative consequences of existing forms of inclusion. The
second part of her argument focuses on an understanding of markets as social institutions.
Because the financial inclusion literature residualises poverty (by seeing poor people as a
residual category who are simply forgotten due to low income), it ignores the possibility
that poverty is the outcome of exploitative relationships. Johnson concludes that the
development agenda of “MF for social inclusion” cannot provide either an analysis or
tools that permit us to understand the multidimensional terms on which people are either
excluded or included in the regulated financial system. To fill this gap Johnson draws on
economic anthropology and sociology to explore the social regulation of MF markets, in
particular the regulative role of gender relations.
An interdisciplinary engagement requires open scrutiny of methods so that the different
steps in the scientific approach can be welded to ethnographic observation of financial and
monetary practices at the individual and micro-institutional scale. Certain concepts such as
poverty (Alkire, 2007) or empowerment (Gue
´rin & Palier, 2004; Narayan, 2005) are
multidimensional by definition and also require more than one discipline for a full
understanding. However, multidimensional concepts such as empowerment are frequently
collapsed into relatively simple indicators, often with an emphasis on economic aspects. It
is this contradiction between the complexity and multidimensionality of the concept and
the simplicity of the measures that concerns Supriya Garikipati in her paper “Microfinance
and women’s empowerment: Have we been looking at the wrong indicators?”, Garikipati’s
objective is to examine the implications of the way that women’s empowerment is
measured. Empowerment cannot be understood from a mono-dimensional perspective:
nuance in practical and analytical method is needed to capture the key elements of
women’s empowerment. Developing earlier comprehensive analyses by Fernando (1997),
Kabeer (2001), Mayoux (2001) and Johnson (2005), and making use of a case study from
rural India, Garikipati’s paper confronts empowerment both as outcomes for women and as
gendered processes. She illustrates the misleading consequences of measuring outcomes
alone, even if they are easily recorded using conventional survey techniques, and shows
how observing the processes of loan use and repayment allows us to understand the
determinants which explain the measured outcomes.
Isabelle Gue
´rin, Santhosh Kumar & Isabelle Agier develop a case study in Tamil Nadu
from a mix of qualitative evidence and quantitative data analysis of certain structural,
S10 C. Fouillet et al.
Downloaded by [the Bodleian Libraries of the University of Oxford] at 11:54 23 July 2013
individual and subjective traits they identified in their qualitative research. Deconstructing
women’s narratives both by their class position and by their lived experience, they show
how women define, perceive and experience empowerment. They note that the meaning of
an action to its subject is not visible from remote observation but requires reference to the
felt experience. Without claiming generality, they show how some cases of women’s
empowerment translate into the disempowerment of others. These dynamic and shifting
power relations [what they call (following Harvey, 2006) the dialectics of socio-
environmental change] provide keys to understanding MF as part of deeper processes of
social domination (Keating et al., 2010).
Jessica Schicks develops an innovative definition of over-indebtedness in MF,
highlighting the role of external influences and the responsibility of lenders. She uses
concepts from psychological literature to construct an appropriate definition for customer
protection. Her analysis also suggests causes of over-indebtedness which could be
addressed without reducing access to finance. She concludes that products should and can
be better tailored to the needs and repayment capacities of the poor.
Thibaut Dehem and Marek Hudon provide original data on the differences in access to MF
services between rural and urban areas in India. For 255 clients in 48 MF groups in India,
they analyse the costs of access to MF services. These data are used to compare the
transaction costs between urban and rural MF clients. Their results suggest significantly
higher opportunity costs of urban MF borrowers than those incurred by their rural
As Harvey (1985, p. 12) observes:
Money creates an enormous capacity to concentrate social power in space, for unlike
other use values it can be accumulated at a particular place without restraint. And
these immense concentrations of social power can be put to work to realise massive
but localised transformations of nature, the construction of built environments, and
the like.
In this spirit we have tried to show how the case studies in this special issue have
implications not only for our understanding of MF but also for development studies
generally and for social science methodology in the analysis of the wide range of social
changes triggered by local micro-finance.
7. Conclusion
This introduction has explored how MF has evolved as a “sub-field” of development
studies research, grounded in economics and management but incorporating other
disciplines. First we have emphasised the complexity of the “economic” trajectories of
groups and individuals engaged in MF and have suggested that the evidence for its role in
building social capital, reducing poverty and empowering women remains mixed. Second,
we have addressed the link between the global development architecture, linking its
growing commercialisation to wider trends of privatisation and liberalisation, and towards
concepts of market rationality.
Last, we have explored the scope and limitations of MF as a development project, and
how MF research has contributed creatively to the analysis of poverty. The availability,
access and uptake of financial services have been found to affect people’s ability to
Microfinance Studies S11
Downloaded by [the Bodleian Libraries of the University of Oxford] at 11:54 23 July 2013
make investments, build financial and physical assets, and handle economic shocks, in
ways that are as mixed and complicated as the wider political economy within which
MF operates.
An interesting sub-plot here was the fall from fashion of cooperative credit institutions. Kalmi (2007)
links this to the more general loss of interests in institutions within the increasingly dominant
neoclassical economic paradigm. But empirical evidence of state “hijacking” of cooperatives,
accompanied by growing inefficiency and subsidy-dependence was also important.
By 2012, the academic journals World Development,Journal of International Development,Journal of
Development Economics and Journal of Development Studies had devoted 59, 44, 21 and 17 articles
respectively to this theme. We ran a search in on-line academic databases that contained the widest-
possible range of sources in social sciences literature. These databases (Repec, Econlit, ISI Web
Knowledge, Worldcat) include information published in peer-reviewed articles, books, reports,
conferences papers and presentations. In October 2012, we ran a search in ISI Web of Knowledge, for
example, using the following search terms: Topic ¼(microfinance*OR microcredit*OR micro-credit*
OR micro-financ*)ORTitle¼(microfinanc*OR microcredit*OR micro-credit*OR micro-financ*).
The searches were initially screened and we assess all titles and abstracts publications to counted, for each
years, the numberof articles studying microfinance. Runningthe searches and assessing titles and abstracts
was time-consuming since contrary to epidemiology, for example, in the social sciences abstracts are not
structured and do not often address the question being addressed or the methodology employed.
Dynamic incentive mechanisms affect future rules and behaviour including weekly repayment schedules,
mandatory savings and joint liability. As an example of dynamism, if one of the borrowers in the group
does not reimburse her/his loan, none of the members of the group are eligible for future loans.
The database used by the Institute for Scientific Information to calculate the Journal Impact Factor.
Social capital is a fuzzy term. Rankin (2002) argues that MF enables different programmatic
implications of both liberal and Marxian theories of social capital to be explored. But in the context of
this introduction. Rankin’s sense of social capital is that employed by the World Bank and mainstream
development agencies, where social capital is construed within the liberal tradition as the cultural
properties, such as trust, norms, and networks. These enhance efficiency specifically by facilitating
As opposed to the direct bank-borrower relationship or individual-based lending models. Holvoet
(2005) has shown that social group intermediation had incrementally transformed group members into
active actors of local institutional change.
Where significant control means “control over every aspect of the productive process with the sole
exception of marketing”. See the index of loan control built up by Goez & Sen Gupta (1996, p. 48).
For further discussion of the relative strengths and weaknesses of RCTs see Banerjee et al. (2009),
Copestake et al. (2009), Labrousse (2010), Barrett & Carter (2010), Deaton (2010), and Duvendack
et al. (2011).
Four of the six papers were drawn from presentations given at the CERMi/Oxford Workshop
“Microfinance’s Contribution to Development Studies” in Brussels, Belgium in January 2010: those by
James Copestake; Susan Johnson; Supriya Garikapati; and Isabelle Gue
´rin, Santhosh Kumar and
Isabelle Agier. Two papers are direct submissions to the journal (Jessica Shicks and Thibaut Dehem and
Marek Hudon). The editors of this special issue wish to record their thanks to the British Council
Partnership Programme in Science Award (PPS WS01B) which provided the funds that made the
workshop possible.
Agier, I. & Szafarz, A. (2013) Microfinance and gender: is there a glass ceiling on loan size? World Development,
42, pp. 165181.
Alkire, S. (2007) The missing dimensions of poverty data: introduction to the special issue, Oxford Development
Studies, 35(4), pp. 347359.
S12 C. Fouillet et al.
Downloaded by [the Bodleian Libraries of the University of Oxford] at 11:54 23 July 2013
Amin, S., Rai, A. S. & Topa, G. (2003) Does microcredit reach the poor and vulnerable? Evidence from northern
Bangladesh, Journal of Development Economics, 70(1), pp. 5982.
Ardener, S. (1964) The comparative study of rotating credit associations, Journal of the Royal Anthropological
Institute of Great Britain and Ireland, 94(2), pp. 201229.
´riz, B. & Morduch, J. (2010) The Economics of Microfinance (Cambridge, MA: MIT Press).
´riz, B. & Szafarz, A. (2011) On mission drift in microfinance institutions, in: B. Armenda
´riz & M. Labie
(Eds) The Handbook of Microfinance (London-Singapore: World Scientific Publishing), pp. 341 366.
Ashraf, N., Karlan, D. & Yin, W. (2010) Female empowerment: impact of a commitment savings product in the
Philippines, World Development, 38(3), pp. 333344.
Ashta, A. & Hudon, M. (2012) The Compartamos microfinance IPO: mission conflicts in hybrid institutions with
diverse shareholding, Strategic Change, 21(78), pp. 331341.
Augsburg, B. & Fouillet, C. (2010) Profit empowerment: the microfinance institutions’ “mission drift”,
Perspectives on Global Development and Technology, 9, pp. 327355.
Banerjee, A. V., Duflo, E., Glennerster, R. & Kinnan, C. (2009) The Miracle of Microfinance? Evidence From a
Randomized Evaluation (Cambridge, MA: MIT Poverty Action Lab).
Barrett, C. B. & Carter, M. R. (2010) The power and pitfalls of experiments in development economics: some
non-random reflections, Applied Economic Perspectives and Policy, 32(4), pp. 515 548.
Bascom, W. R. (1952) The Esusu: a credit institution of the Yoruba, Journal of the Royal Anthropological
Institute, 82(1), pp. 6370.
Bateman, M. (2012) The role of microfinance in contemporary rural development finance policy and practice:
imposing neoliberalism as ‘best practice’, Journal of Agrarian and Change, 12(4), pp. 587 600.
Battilana, J. & Dorado, S. (2010) Building sustainable hybrid organizations: the case of commercial microfinance
organizations, Academy of Management Journal, 53(6), pp. 1419– 1440.
Baxter, R. D. (1860) The Budget and the Income Tax (London: Macmillan).
Bouman, F. J. A. (1977) Indigenous savings and credit societies in the third world: a message, Savings and
Development, 1, pp. 181218.
Bouman, F. J. A. & Hospes, O. (1994) Financial Landscapes Reconstructed. The Fine Art of Mapping
Development (Boulder: Westview Press).
Brett, J. A. (2006) “We sacrifice and eat less”: the structural complexities of microfinance participation, Human
Organization, 65(1), pp. 819.
Cassar, A., Crowley, L. & Wydick, B. (2007) The effect of social capital on group loan repayment: evidence from
field experiments, Economic Journal, 117, pp. 85– 106.
Coleman, B. E. (1999) The impact of group lending in Northeast Thailand, Journal of Development Economics,
60, pp. 105141.
Collins, D., Morduch, J., Rutherford, S. & Ruthven, O. (2009) Portfolios of the Poor: How the World’s Poor live
on $2 a Day (Princeton: Princeton University Press).
Copestake, J. (2007) Mainstreaming microfinance: social performance management or mission drift? World
Development, 35(10), pp. 17211738.
Copestake, J., Bhalotra, S. & Johnson, S. (2001) Assessing the impact of microcredit: a Zambian case study, The
Journal of Development Studies, 37(4), pp. 81100.
Copestake, J., Goldberg, N. & Karlan, D. (2009) Randomized control trials are the best way to measure impact of
microfinance programs and improve microfinance product designs, Enterprise Development and
Microfinance, 20(3), pp. 167– 176.
Cottereau, A. & Marzok, M. M. (2011) Une famille andalouse. Ethnocomptabilite
´d’une e
´conomie invisible
(Paris: Bouchene).
Cull, R., Demirguc-Kunt, A. & Morduch, J. (2009) Microfinance meets the market, Journal of Economic
Perspectives, 23(1), pp. 167192.
Deaton, A. (2010) Instruments, randomisation, and learning about development, Journal of Economic Literature,
48, pp. 424455.
Demirguc-Kunt, A. & Klapper, L. (2012) Measuring financial inclusion: the global findex, World Bank Policy
Research Working Papers, 6025 (Washington, DC: World Bank).
Dieterici, K. F. W. (1857) Statistische ubersicht der wichtigsten Gegestande des Verkehrs und Verbrauchs im
Preussischen Staate und im deutschen Zollverbande (Berlin).
Ducpetiaux, E. (1855) Budgets e
´conomiques des classes ouvrie
`res en Belgique (Brussels: Commission Centrale
de Statistique).
Microfinance Studies S13
Downloaded by [the Bodleian Libraries of the University of Oxford] at 11:54 23 July 2013
Duvendack, M., Palmer-Jones, R., Copestake, J., Hooper, L., Loke, Y. & Rao, N. (2011) What is the Evidence of
the Impact of Microfinance on the Well-being of Poor People? (London: EPPI-Centre, University of
Elyachar, J. (2005) Markets of Dispossession: NGOs, Economic Development, and the State in Cairo (Durham
and London: Duke University Press).
Elyachar, J. (2008) Best practices: research, finance, and NGOs in Cairo, American Ethnologist, 33(3),
pp. 413426.
Escobar, A. (1995) Encountering Development: The Making and Unmaking of the Third World (Princeton:
Princeton University Press).
Fernando, J. L. (1997) Nongovernmental organizations, micro-credit, and empowerment of women, The Annals
of the American Academy of Political and Social Science, 554, pp. 150– 177.
Fernando, J. L. (Ed.) (2006) Microfinance. Perils and Prospects (London: Routledge).
Fouillet, C., Gue
´rin, I., Morvant-Roux, S., Roesch, M. & Servet, J.-M. (2007) Le microcre
´dit au pe
´ril du
´ralisme et de marchands d’illusions. Manifeste pour une inclusion financie
`re socialement
responsable, Revue du MAUSS, 29, pp. 329350.
Gangopadhyay, S., Ghatak, M. & Lensink, R. (2005) Joint liability lending and the peer selection effect,
Economic Journal, 115(506), pp. 10051015.
Garikipati, S. (2008) The impact of lending to women on household vulnerability and women’s empowerment:
evidence from India, World Development, 36(12), pp. 26202642.
Geertz, C. (1962) The rotating credit association: a ‘middle rung’ in development, Economic Development and
Cultural Change, 1, pp. 241263.
Ghatak, M. (1999) Group lending, local information and peer selection, Journal of Development Economics,
60(1), pp. 2750.
Goetz, A. & Sen Gupta, R. (1996) Who takes the credit? Gender and power in rural credit programmes in
Bangladesh, World Development, 27(1), pp. 4563.
Gough, I. & McGregor, J. A. (Eds) (2007) Wellbeing in Developing Countries: From Theory to Research
(Cambridge: Cambridge University Press).
Gravesteijn, R. & Copestake, J. (2010) Microfinance and social performance, in: R. A. Denemark (Ed.) The
International Studies Encyclopedia (Chichester: Wiley-Blackwell).
´rin, I. (2006) Women and money: lessons from Senegal, Development and Change, 37(3), pp. 549 570.
´rin, I. & Palier, J. (Eds) (2004) Microfinance Challenges: Empowerment or Disempowerment of the Poor?
(Pondicherry: French Institute of Pondicherry).
´rin, I. & Servet, J.-M. (Eds) (2004) Exclusions et liens financiers. Rapport du Centre Walras 2003 (Paris:
´rin, I., Morvant-Roux, S. & Servet, J.-M. (2011) Understanding the diversity and complexity of demand for
microfinance services: lessons from informal finance, in: B. Armenda
´riz & M. Labie (Eds) Handbook of
Microfinance (London-Singapore: World Scientific Publishing).
´rin, I., Morvant-Roux, S. & Villarreal, M. (Eds) (forthcoming) Microfinance, Debt and Over-indebtedness:
Juggling with Money (London: Routledge).
Guinnane, T. W. (2011) The early German credit cooperatives and microfinance organizations today: similarities
and differences, in: B. Armenda
´riz & M. Labie (Eds) Handbook of Microfinance (London-Singapore: World
Scientific Publishing).
Harper, M. (Ed.) (2003) Microfinance. Evolution, Achievements and Challenges (London: ITDG).
Harriss, B. (1983) Money and commodities: their interaction in a rural Indian setting, in: J. D. Von Pischke, D. W.
Adams & G. Donald (Eds) Rural Financial Markets in Developing Countries: Their Use and Abuse
(Baltimore: The Johns Hopkins University Press).
Harvey, D. (1985) Consciousness and the Urban Experience: Studies in the History and Theory of Capitalist
Urbanization (Oxford: Basil Blackwell and Johns Hopkins University Press).
Harvey, D. (2006) Spaces of Global Capitalism: A Theory of Uneven Geographical Development (London:
Hermes, N., Lensink, R. & Mehrteab, H. (2005) Peer monitoring, social ties and moral hazard in group lending
programs: evidence from Eritrea, World Development, 33(1), pp. 149– 169.
Holvoet, N. (2005) The impact of microfinance on decision-making agency: evidence from South India,
Development and Change, 36, pp. 75102.
Hulme, D. (2000) Impact assessment methodologies for microfinance: theory, experience and better practice,
World Development, 28(1), pp. 79– 98.
S14 C. Fouillet et al.
Downloaded by [the Bodleian Libraries of the University of Oxford] at 11:54 23 July 2013
Hulme, D. & Mosley, P. (1996) Finance Against Poverty (London: Routledge).
Johnson, S. (2004) Gender norms in financial markets: evidence from Kenya, World Development, 32(8),
pp. 1355– 1374.
Johnson, S. (2005) Gender relations, empowerment and microcredit: moving on from a lost decade, The
European Journal of Development Research, 17, pp. 224 248.
Johnson, S. & Nino-Zarazua, M. (2011) Financial access and exclusion in Kenya and Uganda, The Journal of
Development Studies, 47(3), pp. 475496.
Kabeer, N. (2001) Conflicts over credit: re-evaluating the empowerment potential of loans to women in rural
Bangladesh, Journal of Development Studies, 38(1), pp. 6384.
Kalmi, P. (2007) The disappearance of cooperatives from economics textbooks, Cambridge Journal of
Economics, 31(4), pp. 625647.
Karlan, D. & Goldberg, N. (2010) Microfinance evaluation strategies: notes on methodology and findings, in: B.
´riz & M. Labie (Eds) The Handbook of Microfinance (London-Singapore: World Scientific
Karlan, D. & Zinman, J. (2009) Expanding Microenterprise Credit Access: Using Randomized Supply Decisions
to Estimate the Impacts in Manila (New Haven: Innovations for Poverty Action).
Keating, C., Rasmussen, C. & Rishi, P. (2010) The rationality of empowerment: microcredit, accumulation by
dispossession, and the gendered economy, Journal of Women in Culture and Society, 36(1), pp. 153– 176.
Labrousse, A. (2010) Nouvelle e
´conomie du de
´veloppement et essais cliniques randomise
´s: une mise en
perspective d’un outil de preuve et de gouvernement, Revue de la Re
´gulation, 7(2), available at http://
Le Play, P. G. F. (1855) Les ouvriers europe
´ens (Paris: Imprimerie impe
Leach, F. & Sitaram, S. (2002) Microfinance and women’s empowerment: a lesson from India, Development in
Practice, 12(5), pp. 575588.
Ledgerwood, J. & White, V. (2006) Transforming Microfinance Institutions (Washington, DC: The World Bank
and The MicroFinance Network).
Little, K. (1957) The role of voluntary associations in West African urbanization, American Anthropologist, 59,
pp. 579– 596.
Mayoux, L. (2001) Tackling the down side: social capital, women’s empowerment and micro-finance in
Cameroon, Development and Change, 32(3), pp. 435464.
McGregor, J. A., McKay, A. & Velazco, J. (2007) Needs and resources in the investigation of well-being in
developing countries: illustrative evidence from Bangladesh and Peru, Journal of Economic Methodology,
14(1), pp. 107131.
Mersland, R. & Strøm, T. (2010) Microfinance mission drift? World Development, 38(1), pp. 28 36.
Moodie, M. (2008) Enter microcredit: a new culture of women’s empowerment in Rajasthan? American
Ethnologist, 35(3), pp. 454465.
Morduch, J. (1999) The microfinance promise, Journal of Economic Literature, 37(4), pp. 1569 1614.
Morduch, J. (2000) The microfinance schism, World Development, 28(4), pp. 617 629.
Narayan, D. (2005) Measuring Empowerment: Cross-disciplinary Perspectives (Washington, DC: World Bank).
Ngo, T. & Wahhaj, Z. (2012) Microfinance and gender empowerment, Journal of Development Economics, 99(1),
pp. 112.
Pache, A. C. & Santos, F. (2010) When worlds collide: the internal dynamics of organizational responses to
conflicting institutional demands, Academy of Management Review, 35(3), pp. 455476.
Pattenden, J. (2010) A neo-liberalisation of civil society? Self-help groups and the labouring class poor in rural
South India, The Journal of Peasant Studies, 37(3), pp. 485512.
Pitt, M. & Khandker, S. (1998) The impact of group-based credit programs on poor households in Bangladesh:
does the gender of participants matter, Journal of Political Economy, 106(5), pp. 958996.
Radhakrishnan, S. (1975) Chit Funds and Finance Corporations (Chennai: Institute for Financial Management
and Research).
Radhakrishnan, S. (1979) Nidhis: An Indigenous Financial Institution (Chennai: Institute for Financial
Management and Research).
Rahman, A. (1999) Micro-credit initiatives for equitable and sustainable development: who pays? World
Development, 27(1), pp. 6782.
Rankin, K. N. (2001) Governing development: neoliberalism, microcredit, and rational economic woman,
Economy and Society, 30(1), pp. 1837.
Microfinance Studies S15
Downloaded by [the Bodleian Libraries of the University of Oxford] at 11:54 23 July 2013
Rankin, K. N. (2002) Social capital, microfinance, and the politics of development, Journal of Feminist
Economics, 8(1), pp. 1– 24.
Ravi, S. & Rai, A. (2011) Do spouses make claims? Health seeking and microfinance in India, World
Development, 39(6), pp. 913921.
Reddy, D. V. (2012) The political economy of microfinance and marginalised groups: implications of alternative
institutional strategies, paper presented to the conference on Capitalism and Development in the 21st
Century, University of Oxford (QEH/ODID), July 45.
Rutherford, S. (2000) The Poor and Their Money (New Delhi: Oxford University Press).
Seibel, H. D. (1967) Labour co-operatives among the MaNo, Liberian Studies, 1(1), pp. 47– 60.
Seibel, H. D. (1970) Indigenous economic cooperation and its developmental function in Liberia, Cooperative
Information, 3, pp. 753.
Seibel, H. D. & Massing, A. (1974) Traditional Organizations and Economic Development: Studies of Indigenous
Cooperatives in Liberia (New York: Praeger Publishers).
Sen, A. (1999) Development as Freedom (Oxford: Oxford University Press).
Servet, J.-M. (2006) Banquiers aux pieds nus (Paris: Odile Jacob).
Soen, D. & Comarmond, P. (1972) Savings associations among the Bamileke: traditional and modem cooperation
in South-West Cameroon, American Anthropologist, 74, pp. 1170– 1179.
Stiglitz, J. (1990) Peer monitoring and credit markets, World Bank Economic Review, (4), pp. 351 366.
Stiglitz, J. & Weiss, A. (1981) Credit rationing in markets with imperfect information, American Economic
Review, 71(3), pp. 393410.
Taylor, M. (2011) ‘Freedom from poverty is not for free’: rural development and the microfinance crisis in
Andhra Pradesh, India, Journal of Agrarian Change, 11(4), pp. 484504.
Taylor, M. (2012) The antinomies of ‘financial inclusion’: debt, distress and the workings of Indian microfinance,
Journal of Agrarian Change, 12(4), pp. 601610.
Von Pischke, J. D., Adams, D. W. & Donald, G. (Eds) (1983) Rural financial markets in developing countries:
their use and abuse (Baltimore: The Johns Hopkins University Press).
Weber, H. (2002) The imposition of a global development architecture: the case of microcredit, Review of
International Studies, 28(3), pp. 537– 555.
Weber, H. (2006) The global political economy of microfinance and poverty reduction: locating local
‘livelihoods’ in political analysis, in: J. L. Fernando (Ed.) Microfinance. Perils and Prospects (London:
Woller, G. M., Dunford, C. & Warner, W. (1999) Where to microfinance? International Journal of Economic
Development, 1(1), pp. 2964.
World Bank (2008) World Development Report 2008: Agriculture for Development (Washington, DC: World
Wright, K. (2006) The darker side to microfinance: evidence from Cajamarca, Peru, in: J. Fernando (Ed.)
Microfinance Perils and Prospects (New York: Routledge).
Wu, D. T. H. (1974) To kill three birds with one stone: the rotating credit associations of the Papua New Guinea
Chinese, American Ethnologist, 1, pp. 565583.
Zeller, M. (2006) A comparative review of major types of rural microfinance institutions in developing countries,
Agricultural Finance Review, 66(2), pp. 195213.
Zelizer, V. A. (1989) The social meaning of money: Special monies, American Journal of Sociology, 95,
pp. 342377.
S16 C. Fouillet et al.
Downloaded by [the Bodleian Libraries of the University of Oxford] at 11:54 23 July 2013
... Among community development initiatives, group-based microcredit programmes (microcredit) have been recognised by development agencies as one of the development approaches that can offer poor people access to financial services, with the objective of improving their quality of life (Pitt and Khandker, 1998;Ledgerwood, 1999). In addition to a financial intermediation function, microcredit also offers a social intermediation function and thus promises to be a key strategy in the eradication of poverty, contributing to the achievement of sustainable development goals (Ghatak and Guinnane, 1999;Robinson, 2001;Elahi and Rahman, 2006;Banerjee, 2008;Worthen, 2012;Fouillet et al., 2013). ...
... Microcredit is seen not only as a way of alleviating poverty (Otero, 1999;Hulme, 2000;Remenyi, 2002;Littlefield et al., 2003;Banerjee, 2008); but also a means of empowering women (Barr, 2005;Mcguire and Conroy, 2010;Fouillet et al., 2013). These aspects are discussed below: ...
The overall aim of this research is to evaluate how a UN funded group-based microcredit programme was implemented (considering Javanese culture and Islamic teaching) and what impact it had on achieving gender equality in rural Indonesia. The research seeks to form a comprehensive assessment and understanding the interconnection of gender, Javanese culture and Islamic teaching in the functioning of local savings and loan groups (Affinity Groups/ AGs) established as part of an IFAD funded project in Eastern Java (Participatory Integrated Development in Rainfed Areas/ PIDRA). This research demonstrated that AG can be analysed by hybrid organisation theory, due to its combination of multiple logics, value systems, stakeholders, and goals/missions. As a case study, the research applies a combination of qualitative research methods: document analysis (review of documents), focus group discussion (FGD), and semi-structured interviews. The fieldwork was conducted over three months (April-June 2012). Semi-structured interviews were conducted with 38 participants; 8 PIDRA team representatives and 30 AG members. The study shows that poverty indicators, socio-cultural and religious aspects both influenced the initial process of AG formation i.e. selection of villages and identification of intended beneficiaries of AG members. Strengthening institutional capacity through the formation of AGs, a Federation of AGs, and a Rural Development Institution (RDI) helped the AG members to be involved in various aspects of decision-making in rural development. The findings also confirm that Javanese culture and Islamic teaching influenced AG members’ views and behaviours with respect to gender and microcredit activities; and these aspects have had an impact on the continuity of microcredit programmes. However, although the microcredit programme delivered by the AG had a transformative impact on women’s ability to earn incomes benefits and gender awareness, they tended to increase their workload. Keywords: Microcredit, Affinity Group, Hybrid Organisation, Gender, Javanese Culture, Islamic Religion
... Microcredit could address adversity and market failures following several fundamental provisions, such as peer group selection, joint liability, and monitoring (Ghatak, 1999). Alternatively, microfinance directly highlights programmes impact on the clients in alleviating poverty or making positive changes in education, healthcare, and empowerment of individuals and households (Fouillet, Hudon, Harriss-White & Copestake, 2013;Littlefield, Murdoch & Hashemi, 2003). The economic tradition tends to evaluate the enduse of microfinance services and determine the potential benefits of service usage while considering joint-liability groups as neutral and as if the internal dynamics of groups do not exhibit negative effects on members, households, enterprises, and communities (Marr, 2012). ...
Full-text available
Research Originality: The study employed the methodological approach of reflexive ethnography to analyse management accounting in microfinance. Research Objective: The study aims to present an illustration of reflexive ethnography and its application in investigating management accounting in an informal setting, specifically a rural village in Bangladesh. Method: The study used a reflexivity lens that presents a detailed account of the author’s personal doctoral journey in gaining access to and exploring the field, analysing field data, and overcoming challenges. Empirical Result: The study highlights how to overcome the barrier of ‘functional stupidity’ while examining (management) accounting, governance, and related issues in microfinance. Practical Implications: The contributions include enhancing the accounting and development literature which are dominated by functional paradigm. Moreover, alternative approaches were proposed, such as reflexive ethnography to recognise a more mundane form of management accounting and governance. Keywords: Development, Ethnography, Microfinance, Management Accounting, Reflexivity.
While technical and economic factors are traditionally advanced to explain the failures of microfinance, a growing literature explores how moral factors and socioeconomic norms help to shape financial behaviors. In order to examine this issue in more depth, we conducted an empirical analysis of the links between socioeconomic stratification and financial behaviors. This original perspective enriches the literature on financial inclusion in the under-explored Malagasy context. Using data from the 2008 Itasy Observatory survey, we conducted a cluster analysis to identify five classes of rural households, ranging from a very poor and insecure group to an upper group of educated farming and non-farming households. Using a multinomial treatment-effects model, we established distinct ‘class-based’ credit behaviors showing that financial needs vary according to the users’ socioeconomic profile. What is more, such financial behaviours can be explained by taking social factors into account in addition to economic ones.
India has achieved a considerable success in expanding the outreach of Micro Finance Institutions (MFIs) to promote socio-economic development of the poor sections of the society. However, a transition from social enterprise to commercial enterprise model in the early twenty-first century has led to a tidal wave of criticism centering round the microfinance sector across the globe. Aggressive competitions of MFIs provided the necessary impetus for the inevitable ‘microfinance bubble’ (Andhra Crisis and its spillover effect in the context of India), which ultimately raised a question on the sustainability of MFIs. Microfinance Information Exchange Database is extensively used in developing a pooled dataset of Indian MFIs to examine the impact of crisis on the sustainability of MFIs. In addition to crisis, this study examines the implications of other financial and operating performance in explaining sustainability of MFIs in the changing scenario. Results reveal a positive and significant influence of crisis, return on assets, return on equity, yield on gross portfolio and a negative and significant effect of financial expenses to assets and operating expenses to assets in explaining variation of sustainability score of selected MFIs.
In India, most of the operational holdings are small and marginal, which are not economically viable. The condition of other rural poor, who largely depend on non-farm activities, is also precarious as their resource and income status is even below that of the tiny landholders. The idea of central government is to make a passage through rural development, a part of make in India, using the vessel of micro financing via SHGs. In microfinance, small amounts of loan, coupled with financial discipline, ensure that loans are given more frequently; thus, credit needs for household production and personal purpose can be met. One of the major contributions of microfinance is toward women’s empowerment. And when it is directed at women, the benefits accruing out of the microfinancing activities are expected to multiply manifold. In this article, we provide a critical evaluation of the discussion on the potential contribution of microfinance in reducing poverty. This study aims to empirically examine the influence of activities under SHGs on poverty with the help of probit model based on mainly primary data survey on the basis of Stratified Random Sampling in West Bengal. This study reveals that SHGs have a significant impact on poverty reduction.
For achieving long-term sustainability of economic growth, bringing in the benefits of growth to all sections of the society is critical. Microfinancing by microfinance institutions (MFIs) hitherto remains a powerful tool for development and it has bought many changes in the lives of many poor people. In this study, an attempt has been made to measure efficiency of MFIs operating in West Bengal for 2016–17 to 2018–19 through Data Envelopment Analysis. As evident from Shapiro Wilk test the study shows, efficiency scores follow a normal distribution. Further, Friedman test reveals a significant difference in efficiency scores during the study period. To get more specific result Wilcoxon signed-rank test is used. The study reveals that all the nine inefficient MFIs have the scope of producing 1.17 times to 4.32 times with the same level of input. To overcome the present recession situation there may be a requirement in an increase of investment and aggregate demand of consumer spending by escalating efficiency of MFIs.
The major barrier is global recession behind the socio-economic development of any economy. Low level or poor economic growth in developed and developing economies means increasing probability of a global recession in near future period. United Nations has warned about the forthcoming crucial condition. It is assumed that warning lights would be flashing around poverty, gross domestic product (GDP), trade wars, currency circulations, financial autonomy and financial volatility etc. India is a country where 60% of the population depends on agriculture (according to World Bank reports), microfinance can play an important role in providing financial services to the low-income households. Microfinance is a strategy for providing better access to finance to the unbanked people of an economy, which may have impact on economic growth within territory. The impacts can be explained in various aspects or areas such as household level, individual level, enterprise level, job creation etc. (DONOR BRIEF No. 13, July 2003, CGAP, World Bank.). Here the term poverty is used in place of global recession metaphorically. The following chapter is based on the analysis of the impacts of microfinance activities upon poverty alleviation in three countries, India, Bangladesh and Nigeria where loans from microfinance institutions and deposits in the microfinance institutions are taken as the explanatory variables of the model. It is derived that there are positive and significant impact of financial activities of microfinance institutions on poverty alleviation for the selected nations except Nigeria.KeywordsMicrofinanceGlobal recessionPovertyUnbanked PeopleFinancial autonomyFinancial volatility
Full-text available
The current socio-economic climate is marked by an increased focus on corporate responsibility and the role of business in society. In this climate, megamarketing – efforts to develop and sustain an industry or market by gaining the cooperation and support of various stakeholders and publics – is an increasingly relevant approach. Current research in megamarketing focuses on understanding how various industry actors and stakeholders establish the legitimacy of a given industry by accommodating prevailing regulatory, normative, and cultural-cognitive structures. In contrast, this paper examines megamarketing efforts that go beyond such attempts to establish legitimacy towards establishing an industry as a virtuous entity displaying qualities that surpass minimal accepted standards and ‘business-as-usual.’ Inspired by work on virtue ethics in organisational studies, we develop the concept of industry aura: a ‘halo’ of unique and authentic virtues that characterise an industry. We explore the development of industry aura by surveying the discursive megamarketing tactics through which microfinance has been established as a virtuous industry. We conducted qualitative and quantitative analyses of 589 articles about microfinance appearing in five selected newspapers between 1986 and 2016. Our findings reveal three sets of megamarketing discursive tactics: 1) diagnostic framing and social mission framing, deployed to establish microfinance as a virtuous entity; 2) virtue anchoring and frame bridging, used to defend the industry’s aura in times of authenticity crisis; and 3) diagnostic and social-mission reframing aimed at recovering the tarnished aura of microfinance. Our paper enriches megamarketing research by charting relevant terrain that stretches beyond the established vectors of legitimacy theorizing and offers important implications for megamarketing practitioners.
Full-text available
Microfinance services have emerged as an effective tool for financing micro-entrepreneurs to alleviate poverty. Since the 1970s, development theorists have considered non-governmental microfinance institutions (MFIs) as the leading practitioners of sustainable development through financing micro-entrepreneurial activities. This study evaluates the impact of micro-finance services provided by MFIs on poverty alleviation. In this vein, we examine whether microfinance services contribute to poverty alleviation, and also identify bottlenecks in micro-finance programs and operations. The results indicate that the micro-loans have a statistically significant positive impact on the poverty alleviation index and consequently improve the living standard of borrowers by increasing their level of income.
Technical Report
The aim of the research project is to assess the complementarity between mobile financial services and other financial infrastructures and systems in India. Complementarity refers to the presence of a demand or deficit at one location and a supply or surplus at another. To examine this objective we will couple the spatial analysis of the distribution and evolution of mobile payments with the distribution and evolution of financial inclusion in India, with special attention to the role of Banking Correspondents (BC) as an interface between a bank and its customers to facilitate deposits and withdrawals. Two levels of analysis are used to undertake a critical analysis of the spatial and social dimensions of mobile financial services ecosystems in India: national level and district level (Dharmapuri district in Tamil Nadu). Our study will also look into what the frictions of physical, social, and economic constraints are in complementing the activities of the formal banking industry. The researchers feel that if these frictions of physical, social, and economic distances are too great, then successful interaction will not occur in spite of a complementary supply-demand relationship. Findings about spatial variation and change to financial inclusion are highly relevant to our understanding of the complex processes of regional development that are currently underway in India.
Full-text available
In a world where many experience unprecedented levels of wellbeing, chronic poverty remains a major concern for many developing countries and the international community. Conventional frameworks for understanding development and poverty have focused on money, commodities and economic growth. This book challenges these conventional approaches and contributes to a new paradigm for development centred on human wellbeing. Poor people are not defined solely by their poverty, and a wellbeing approach provides a better means of understanding how people become and stay poor. It examines three perspectives: ideas of human functioning, capabilities and needs; the analysis of livelihoods and resource use; and research on subjective wellbeing and happiness. A range of international experts from the fields of psychology, economics, anthropology, sociology, political science and development evaluate the state of the art in understanding wellbeing from these perspectives. This book establishes a new strategy and methodology for researching wellbeing that can influence policy.
Summary Impact evaluation studies routinely find that lending to women benefits their households. However, a number of them also find that this may not empower the women concerned. This seemingly paradoxical conclusion is confirmed by our study with respect to a lending program in rural India. We investigate this result by examining a combination of loan-use data and borrower-testimonies. We find that loans procured by women are often diverted into enhancing household's assets and incomes. This combined with woman's lack of co-ownership of family's productive assets, we conclude, results in her disempowerment. If empowering women is a crucial objective, then the patriarchal hold on productive assets must be challenged.
Until recently the use of agricultural credit as a developmental tool seemed clear and straightforward. Most concerned people believed that increases in the volume of cheap credit were necessary to boost agricultural production, and that the rural poor could be brought into the mainstream of development through supervised credit programs. It seemed that certain ideal types of rural credit institutions offered the promise of meeting farmers' credit needs, and that experience in the industrialized countries with cooperatives and specialized agricultural finance institutions could be effectively transplanted to low-income countries. This collection of readings highlights facets of rural financial markets that have often been neglected in discussions of agricultural credit in developing countries. It moves beyond a narrow concern with the simple provision of credit to a broad consideration of the performance of rural financial markets and of ways to improve the quality and range of financial services for low-income farmers. It reflects new thinking on the design, administration, evaluation and policy framework of rural finance and credit programs in developing countries.
This paper sheds light on a poorly understood phenomenon in microfinance which is often referred to as “mission drift”: A tendency reviewed by numerous microfinance institutions to extend larger average loan sizes in the process of scaling–up. We argue that this phenomenon is not driven by transaction cost minimization alone. Instead, poverty-oriented microfinance institutions could potentially deviate from their mission by extending larger loan sizes neither because of “progressive lending” nor because of “cross-subsidization” but because of the interplay between their own mission, the cost differentials between poor and unbanked wealthier clients, and region-specific clientele parameters. In a simple one-period framework we pin down the conditions under which mission drift can emerge. Our framework shows that there is a thin line between mission drift and cross subsidization, which in turn makes it difficult for empirical researchers to establish whether a microfinance institution has deviated from its poverty-reduction mission. This paper also suggests that institutions operating in regions which host a relatively small number of very poor individuals might be misleadingly perceived as deviating from their social objectives. Because existing empirical studies cannot differentiate between mission drift and cross-subsidization, these studies can potentially mislead donors and socially responsible investors pertaining to resource allocation across institutions offering financial services to the poor. The difficulty in separating cross-subsidization and mission drift is discussed in light of the contrasting experiences between microfinance institutions operating in Latin America and South Asia. © 2011 by World Scientific Publishing Co. Pte. Ltd. All rights reserved.
Microfinance institutions now occupy a central place in development policy. The economic problems that make special microfinance institutions necessary are not new, and several scholars have drawn attention to the similarities between modern microfinance institutions and older lenders. This paper uses a tight focus on one historical institution (Germany's credit cooperatives) and two of the oldest modern microfinance institutions to make a careful point-by-point comparison. Issues to consider include lending policy, typical loan sizes, sources of finance and the role of larger social and other infrastructure in shaping the institution's conduct. I conclude that despite similar goals, the historical cooperatives were different in ways that might offer lessons for microlenders today. © 2011 by World Scientific Publishing Co. Pte. Ltd. All rights reserved.
How did the industrialized nations of North America and Europe come to be seen as the appropriate models for post-World War II societies in Asia, Africa, and Latin America? How did the postwar discourse on development actually create the so-called Third World? And what will happen when development ideology collapses? To answer these questions, Arturo Escobar shows how development policies became mechanisms of control that were just as pervasive and effective as their colonial counterparts. The development apparatus generated categories powerful enough to shape the thinking even of its occasional critics while poverty and hunger became widespread. "Development" was not even partially "deconstructed" until the 1980s, when new tools for analyzing the representation of social reality were applied to specific "Third World" cases. Here Escobar deploys these new techniques in a provocative analysis of development discourse and practice in general, concluding with a discussion of alternative visions for a postdevelopment era. Escobar emphasizes the role of economists in development discourse--his case study of Colombia demonstrates that the economization of food resulted in ambitious plans, and more hunger. To depict the production of knowledge and power in other development fields, the author shows how peasants, women, and nature became objects of knowledge and targets of power under the "gaze of experts." In a substantial new introduction, Escobar reviews debates on globalization and postdevelopment since the book's original publication in 1995 and argues that the concept of postdevelopment needs to be redefined to meet today's significantly new conditions. He then calls for the development of a field of "pluriversal studies," which he illustrates with examples from recent Latin American movements. © 1995 by Princeton University Press. 1995 by Princeton University Press.