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The Moral Economy of Microfinance in Rural
Bangladesh: Dharma, Gender and Social Change
Mathilde Maîtrot
ABSTRACT
Microfinance is widely portrayed as a tool that empowers poor women to
challenge constraining social institutions and make better, rational choices
that will enable them to escape poverty. At the same time, the reported im-
pact of microfinance is underwhelming, and scandals and poor practices are
widely documented. This then poses a puzzle: why do people still borrow
from microfinance institutions? This article seeks to answer that question
through an ethnographic examination of the moral economy of microfinance
in rural Bangladesh, investigating how morality shapes the remit of legit-
imate economic activity and social change locally. For men, microfinance
fieldworkers use stories of moral ‘idols’ to embed narratives of microfinance
within existing rural social institutions as a way to legitimize and normal-
ize microfinance. For women, borrowing is presented as a means to perform
dharma — the ‘correct order of things’ — a moral imperative to protect,
retain or compete for male guardianship. The moral economy of microfi-
nance is one that motivates people living in poverty to imitate and conform
to prevalent gendered and hierarchical norms and values. These arguments
highlight the significance of conformity to social and moral obligations in
economic behaviour, and bear important implications for understanding the
remits of social change.
INTRODUCTION
In a rural neighbourhood of Tangail district, Bangladesh, Monowara (43)
and Joynuddin (55) are locally known as ‘idols’. When we first met, in the
winter of 2011, the idols told me how they managed to diversify their in-
come sources and manage successful small-scale businesses. Sitting in his
bari (village home) Joynuddin explained that some years after he married
The author would like to acknowledge and thank the Economic and Social Research Council
(ESRC) Global Challenge Research Fund for supporting the research (Project number R120409
and Grant number ES/P010245/1). She would also like to thank colleagues and friends who have
provided invaluable feedback on this piece: Joe Devine, Maïa Green, David Hulme and David
Jackman, as well as the journal’s anonymous reviewers.
Development and Change 0(0): 1–21. DOI: 10.1111/dech.12700
© 2021 The Authors. Development and Change published by John Wiley & Sons Ltd on behalf
of International Institute of Social Studies.
This is an open access article under the terms of the Creative Commons Attribution License,
which permits use, distribution and reproduction in any medium, provided the original work is
properly cited.
2Mathilde Maîtrot
Monowara, microfinance credit officers ‘came to our house to inform us
about loans’. ‘They explained their usefulness’, he said; that ‘if my young
wife takes it, it would help us improve our life … and if we managed to
return the first loan of BDT 10,000 they would give us a BDT 20,000 loan
next time’. Joynuddin remembers following the credit officers’ advice not
to spend the loan but to invest it in the mobile betel nut shop he had been
running.1In 1983, he borrowed BDT 5,000 and repaid it weekly; in 1985
he borrowed a further BDT 10,000; and in 1987, BDT 20,000.2The latter
two loans were invested in a small grocery shop he had opened with his son.
The business was very successful and in 2007, Joynuddin stopped taking
microfinance and sold his shop. The profit from the sale financed his son’s
migration to Malaysia.
Bangladesh is the second largest microfinance market in the world, with
some 25.6 million Bangladeshi borrowers registered in 2017, and part of a
global market estimated to reach 139 million low-income households, with
loans worth US$ 114 billion globally (Convergences, 2018). Stories like
that of Joynuddin and Monowara helped fuel the expansion of the sector
in Bangladesh, and similar cases have become part of a widely accepted
discourse about the poverty-alleviating impact of microfinance. The repre-
sentations of heroic entrepreneurs such as Monowara and Joynuddin began
to encroach on development discourse and practice in the late 1980s. Ini-
tially, microfinance was promoted as a technical solution and tool to support
the poor to negotiate adverse and imperfect markets (de Haan and Zoomers,
2005) and was viewed as countering structuralist analyses of poverty. These
stories portray microfinance’s success as unbridling the entrepreneurial poor,
generating a welcome ‘revolution’ in the mission to eradicate poverty. Al-
though primarily concerned with financial transactions, microfinance ac-
quired an orthodoxic and symbolic status as a primary catalyst of develop-
ment, termed by some ‘microfinance evangelism’ (Rogaly, 1996; Roy, 2010:
93).
As microfinance expanded over time, so did a growing body of research
that raised concerns about the sector’s rapid commercialization, suggesting
the mission and practice of microfinance had ‘drifted’. This highlighted
evidence of malpractices and examined the wider negative social effects and
sometimes polarizing economic impacts of loans and debt for the very poor
(Banerjee and Jackson, 2017; Bateman, 2012; Dichter and Harper, 2007;
Hulme and Maîtrot, 2014; Mader, 2015; Maîtrot, 2018, 2019; Taylor, 2011).
This then poses a puzzle: why, if these analyses are valid, do poor people still
1. The case studies follow the ways in which people in rural Bangladesh construct their per-
sonal history and I take people’s own recollections at face value in the narrative. Ethno-
graphically, it is interesting to note the key events around which people construct their
narratives.
2. BDT 5,000 converts to approximately US$ 58; BDT 10,000 =approx. US$ 116; BDT
20,000 =approx. US$ 232.
The Moral Economy of Microfinance in Rural Bangladesh 3
choose to borrow from microfinance institutions (MFIs)? Common explana-
tions for this in the literature point to the poor’s limited access to alternative
reliable sources of finance, the adverse inclusion or coercion of women bor-
rowers by male family members (husbands, fathers, sons or fathers-in-law),
rising debt levels and borrowing traps. Resonant with wider recent analyses
of microfinance (Goodman, 2017; Guérin and Kumar, 2017; Kar, 2018),
this article suggests a different answer to this question: microfinance’s
expansion was only possible because it was embedded within cultural
norms, rendering it socially acceptable and indeed a moral imperative.
Drawing from a year of ethnographic research in rural Bangladesh, the
article explores the ‘moral economy’ of microfinance by examining how
gendered rationalities shape the meanings and values of economic choices
and behaviours (Goodman, 2017; Palomera and Vetta, 2016; Simoni, 2016).
More specifically, I argue that the expansion of microfinance relied on an
ecology of norms, values and practices that encouraged clients to conform to
existing class and gender inequalities. As hinted at in the opening vignette,
although microfinance targets women, it is common for men to control
loans and use them as they see fit. The role of MFI fieldworkers is crucial in
this process as they construct narratives around ‘idols’ that present microfi-
nance as a moral imperative for poor clients: a means to pursue both moral
aspirations and economic security. In this way microfinance participation
becomes, de facto, a new norm to be adhered to, a moral compass for the
gendered navigation of relational obligations. For women, borrowing then
becomes a means to sustain, redeem or compete for male guardianship. For
men, the option to borrow becomes a means to demonstrate their leadership
and guardianship of their households. Crucially, therefore, morality or
its performance is a medium of exchange that legitimizes the pursuit of
change inherent in microfinance participation, thereby rethinking the place
of individual agency in relation to social change in development (Arce and
Long, 1999; Scott, 1976).
The article is structured as follows: the first section outlines how micro-
finance has been conceptualized as empowering women, enabling ‘rational’
choices and poverty reduction. It then surveys critical readings of such dis-
courses, highlighting the concept of moral economies as a way of exam-
ining how morality shapes the remit of legitimate economic activity and
social change. In the second section, I embed the analysis within the context
of Bangladesh, examining the concept of dharma and the gendered social
institutions women in Bangladesh navigate. The third section explains the
methodology and background to this study, while the subsequent section de-
velops key empirical arguments around the significance of conformity to so-
cial and moral obligations in the pursuit of security and change. Finally, the
conclusion brings together different lines of argument to highlight how cur-
rent development ideals around individual agency and empowerment often
occur incrementally and only if embedded within local moral frameworks.
4Mathilde Maîtrot
AGENCY AND GENDER: MORAL ECONOMIES IN DEVELOPMENT
Central to the expansion of the microfinance sector globally has been a set
of claims about the potential of entrepreneurs to use their agency to pursue
economic and social change. This imaginary has particularly promoted the
idea of women as powerful agents of change. In the 1980s, microfinance was
perceived as representing an opportunity to improve the legitimacy and visi-
bility of women’s social struggles as well as gender inequalities in develop-
ment (Fraser, 2009; Isserles, 2003). Women and girls came to prominence
in the global development agenda as under-tapped resources for change
(Shain, 2013) and their individual agency was considered a strategic locus in
development (Cornwall, 2007; Kabeer, 2011). At a moment when feminism
was often associated with radical socialist ideas, the practice of microfinance
(focusing on group lending and empowerment of women) projected the
image of entrepreneurial rural women, particularly mothers (Hossain, 2017:
90) leading the social transformation by emancipating themselves from and
rupturing existing dysfunctional and oppressive institutions.
The expansion of microfinance coalesced historically with what Rankin
(2001) calls an ideology of the rational economic woman. Rational choice
theory is underpinned by long-standing ideas about how the maximization
of utility functions drives individual decisions and behaviour. Focusing on
answering ‘how’ rather than ‘why’ people make certain choices, this ap-
proach concentrates on economic utility and, by implication, regards indi-
vidual tastes and preferences as exogenous factors (Kabeer, 2010). This the-
ory of choice takes the decisions of individuals as its sole unit of analysis,
giving only narrow consideration to the power dynamics that shape the de-
cision making of those individuals (ibid.). Microfinance then represents an
incursion of a gendered rational choice theory into development thinking
in that it aimed to enable women to make better choices for their house-
hold. Here, the targeting of women was justified by the fact that women
were found to be better at repaying loans than men, and therefore conformed
to notions of rational economic behaviour. Furthermore, loans allocated to
women were found to have better well-being outcomes for household mem-
bers (ibid.). As such, microfinance ‘elevated’ the position of women who,
‘empowered’ with loans, represented a ‘better developmental investment’
(Berkovitch and Kemp, 2011: 160).
This utilitarian view of poor women entrepreneurs has been widely cri-
tiqued on a number of fronts. Notably, it has been argued to depoliticize the
nature of women’s relationships within the household and with the market
(Elyachar et al., 2005: 29–31), and to neglect the multi-dimensionality
of women’s experience of poverty (Saith, 2007) by emphasizing residual
and absolute deficits rather than poverty’s relational characteristics. By
contrast with rational choice theory, more anthropological understandings
of agency put social context at the centre of decision making, and consider
how norms, beliefs, routines and customs operate to shape preferences,
The Moral Economy of Microfinance in Rural Bangladesh 5
attitudes and behaviours (Kabeer, 2010). This view considers that within
any household, an individual member’s sense of self-worth, role and identity
are always shaped by others. One implication of this perspective is that the
economic behaviour of a household is not simply seen as the aggregation of
decisions made by its individual members, but as reflective of negotiations
across a household’s hierarchy. For example, the distribution of labour,
free time and resources within the household will depend on a number of
factors including the perceived contribution made by specific members to
the household’s welfare, and its valuation. Crucially, this approach helps ex-
plain how (in)equalities within the household can be legitimized. Situating
agency within social institutions therefore helps illuminate how the nature
and quality of institutions (that is, ‘the rules of the game’) entangle the
political, economic and financial realms constitutive of the ‘social order’
(Mosse, 2010; Townsend et al., 1999) in ways that shape opportunities for
social change in development (North et al., 2009: 251–71).
Contrary to the narrative that microfinance helps the ‘deserving poor’
caught up in, or held back by, the ‘social’ (Gray, 2010), a growing body
of literature has examined the complex ways in which microfinance in prac-
tice has interplayed with social hierarchies. As Kabeer (2001: 80) argued
two decades ago, any attempt at conceptualizing empowerment needs to be
grounded ‘in an understanding of the relationships of dependence, interde-
pendence and autonomy which characterize gender relations in different cul-
tures, the structures of risks, incentives and opportunities which they gener-
ate’. Rather than empower women, it has been argued that microfinance and
wider poverty alleviation efforts can make women ‘subjects’ of development
(Fernando, 2006; Kabeer, 2005). Microfinance’s effects on intrahousehold
dynamics are often argued to exacerbate existing oppressive social institu-
tions and further entrench the gender and class-based inequalities it is meant
to tackle (Bateman and Maclean, 2017; Fernando, 1997; Karim, 2011). It
can erode the webs of interlocking ties and reciprocal networks upon which
women’s status and survival strategies often rely (Maclean, 2010; Molyneux,
2002). As such, people’s disposition towards and experience of risk can be
argued to be gendered (Maclean, 2013). Where microfinance debts inter-
twine with and capitalize on the invisibility of women’s reproductive work
and ‘social capital’, this can lead to ‘dispossession’ in rural communities
(Paprocki, 2016).
One recent line of argument developed in the context of South Asia is
that for microfinance to thrive, it must serve — or be adapted so that it can
serve — existing social institutions. In the context of India, for example,
Kar (2018: 109) argues that microfinance in Kolkata is ‘domesticated’ into
women’s lives, ‘enfolded into women’s existing schedules of domestic labor,
[thereby] limiting its impact on women’s empowerment’. Goodman (2017)
similarly examines how, for Kumaonis in Uttarakhand, state microfinance
was altered to fit existing ‘exchange relationships’ that govern the life of
the family and community. It ‘became another node in the already existing
6Mathilde Maîtrot
networks of assistance’ (ibid.: 362) and gained popularity on this basis.
For Guérin and Kumar (2017: 742) microfinance in rural South India is
‘both shaped by and constitutive of local structures of power’, meaning that
microfinance strengthens patronage-driven and patriarchal institutions.
In examining how microfinance is adapted and legitimized locally, Kar
(2018) and Goodman (2017) have drawn attention to the role of morality
in this process, deploying the concept of ‘moral economy’. The concept
of a moral economy refers to how shared ethical frameworks legitimize
economic activity, enabling us to examine processes and remits of change.
Whereas it has been argued by classical sociologists that development is
a process that disembeds individuals from local rules, social institutions
and contexts (Polanyi, 1944), a moral economy framework highlights the
entanglement of economic activity and social institutions the rural poor
have to navigate. By contrast with a ‘homo oeconomicus’ characteriza-
tion of agency, the notion of moral economy combats ‘crass economic
reductionism’ that obliterates ‘the complexities of motive, behaviour, and
function’, constructing ‘an abbreviated view of economic man’ (Thompson,
1971: 78). In early and prominent usage within academia, the term was
used to highlight how moments of social and political rupture occur with
the expansion of capitalist relations and conflict with other notions of moral
exchange and activity (Scott, 1976; Thompson, 1971). It hence has served
as a way of examining how socio-political disjuncture can be an indicator
of the ‘conflicting co-presence’ of competing moral frameworks (Simoni,
2016: 462).
However, the concept of moral economy can equally be used as a way of
examining how ideas about moral behaviour intertwine with economic rela-
tionships in ways that maintain rather than rupture the social reproduction of
hierarchy (Palomera and Vetta, 2016). It can thus ‘highlight the ambiguous
logics and values that guide and sustain livelihood practices, by looking at
the dynamic fields of struggle around the boundaries of what is good and
acceptable, their power hierarchies and the political projects they might in-
form’ (ibid.: 415). I therefore adapt Thompson’s framework to accommodate
a more relational perspective that replaces the examination of one particular
population group (i.e., the poor) with the study of the values, meanings and
practices exchanged in and emerging from the interplay between the poor
and microfinance fieldworkers. The exploration of the ways in which the
‘social’ and ‘economic’ are entwined represents a framework for approach-
ing questions of why social actors pursue or resist change, and how this is
conceptualized.
DHARMA, WOMEN AND CHANGE IN BANGLADESH
To begin to examine the moral economy of microfinance in rural
Bangladesh, we need to examine the prevailing social institutions, which are
The Moral Economy of Microfinance in Rural Bangladesh 7
characterized by pervasive interpersonal hierarchical networks of patronage
(Devine, 2006; Lewis, 2011). The concept of dharma, referring to ‘the
proper order of things’, is useful in understanding the way interpersonal
hierarchical relations and networks of patronage are legitimized in
Bangladesh (Devine and White, 2013: 134). Etymologically, the word
‘dharma’ is derived from the Sanskrit root ‘dhr’, meaning to sustain (Inden,
1976: 19), which is suggestive of the attributes of ‘what makes the life
of a community persist’ (Kotalova, 1996: 46). In practice, it comes close
to Bourdieu’s notion of habitus in that it is embodied in people’s habits,
rituals and lifestyle (Bourdieu, 1977). Conventionally translated as religion,
dharma is a broader ontological and moral framework that encompasses a
set of social norms and values that produce individual dispositions and de-
fine the socially accepted contours of individual agency (Devine and White,
2013). As such, social institutions and the hierarchies and obligations they
entail can be seen as having an inherent moral meaning.
The nature of agency is deeply gendered in this context. A prominent
way in which this is felt is through the idea of purdah, the practice of sexual
segregation, which has a long history in Bengali Muslim, Hindu and Chris-
tian communities. It implies that women’s honour is preserved by limiting
their movement and interactions outside the private sphere (Rozario, 2006).
While honour (izzat) is often seen more as men’s responsibility, shame
(lojja) or decency are often seen as women’s attributes (Rozario, 1992:
86). Purdah represents an ecology of norms that govern the respective roles
of men and women in society in ways, often internalized, that influence
women’s capacity to choose for themselves both symbolically and mate-
rially (White, 1992). Despite the forces of globalization and urbanization,
purdah remains a prevalent socio-cultural and ideological institution which
all Bengali women (extreme poor, poor, lower and middle-class women)
navigate and negotiate (within themselves and with others), with varying
degrees of agency (Kabeer, 2010).
Within this order, it is important to examine how economic relationships
and social networks are construed in moral terms and embedded in one
other. Because women’s well-being, access and control over resources is
often mediated by men (Kabeer, 2011), women play an important role in
sustaining the reproduction of purdah as a modus operandi. For this reason,
women’s participation in development initiatives has at times been contested
and opposed by more traditional forces including Islamic groups that per-
ceived women’s involvement in development as a violation of the norms of
purdah, thereby threatening the proper order of things (Naher, 2010).
Although it is true that women play a central role in maintaining dharma,
it is also true that the performance of dharma is a legitimate source of power
for women (Blanchet, 2008). Visibly demonstrating adherence to the proper
order of things is crucial for women. Women often work hard at preserv-
ing and developing good relationships with male patrons, protectors and
guardians (father, brothers, husbands, and sons later on in life), whose moral
8Mathilde Maîtrot
duty is to provide them with material support and relative, if provisional,
security (Kabeer, 2011). The mythico-ritualistic power of marriage is foun-
dational to people’s sense of dharma and therefore constitutive of the re-
production of the moral order of things. For rural poor women therefore,
marriage constitutes a pillar of the undisputed doxa, dharma, that carries
symbolic and practical significance, as it places them within a new hier-
archical system of obligations, which in theory guarantees their husband’s
guardianship (Rozario, 1992; White, 2017). As the distribution of property
is biased towards male household members through a dominant patrilineal
structure (Karim, 2008), women are likely to become poor in the event of
marital breakdown, illness or death of a male income earner (Maîtrot, 2017).
In return for guardianship, therefore, married women maintain a practice of
purdah in ways that protect their izzat and uphold their own moral status as
well as that of their guardians (Kabeer, 2001; Rozario, 1998).
BACKGROUND, METHODOLOGY AND DATA
This study draws on a year of ethnographic research into interactions be-
tween the agents of microfinance institutions and villagers across four vil-
lages in the district of Tangail, conducted in 2010–11. Located about four
hours’ drive north of Dhaka in central Bangladesh, this area is now con-
sidered one of the most densely served districts in terms of MFI coverage
and referred to as ‘the home of microfinance entrepreneurship’ (Chaudhury
and Matin, 2002: 47). All families in the four villages of my study became
acquainted with microfinance organizations in the 1980s.
A common joke among researchers and villagers goes that in this district
of Bangladesh, households are so used to being surveyed by researchers, that
they could fill in questionnaires themselves. From my experience of work-
ing in Bangladesh, I was aware that an NGO affiliation could exacerbate this
problem and bias my interactions with local residents and MFI employees.
I therefore conducted the research as independently as possible, free from
any local institutions, introducing myself as a researcher from a foreign uni-
versity. With a research assistant, I conducted mixed-methods research in
2010 and 2011. The primary research methods were participant observa-
tion and informal interviews with villagers and MFI staff. In addition to
this, I conducted six focus group discussions with current MFI clients, nine
in-depth semi-structured interviews with former clients, and key informant
interviews with local leaders.
When I began the research, it was common for particularly curious locals
to follow me through the towns, villages and on occasion into respondents’
houses. As the novelty of my presence wore off, people became less inter-
ested and aware of my whereabouts and I was able to interview people more
autonomously and privately, one-to-one, on their homestead verandas, in
The Moral Economy of Microfinance in Rural Bangladesh 9
their homes, in paddy fields, at tea stalls and village markets. As much as
possible in this context, I maintained a high level of confidentiality, whilst
being careful not to bother informants in the evenings, when they were tired
and wanted to rest after a day of work. All respondents gave their informed
consent to participate in the study. The information collected was triangu-
lated by asking similar questions to a range of key informants including
police officers, village leaders, other family members, religious leaders,
shopkeepers and microfinance agents. Fieldwork was conducted in Bangla.
The data were transcribed, translated into English, entered into NVivo and
coded thematically.
Using qualitative methods to explore the ‘seamless fabric’ of lived experi-
ences (Latour, 1993: 7) in this way is important in challenging proliferating
interpretations and assumptions about social change in development (Arce
and Long, 1999). Researching and interweaving multiple narratives of the
lived experiences of microfinance clients — both past and current — was
crucial for examining individual agency in the face of the changes and the
authority that microfinance agents embody (Olivier de Sardan, 2005). These
narratives allowed me to examine the various meanings, including ambigu-
ities, of individual agency.
DEMONSTRATION, OBLIGATION AND IMITATION
Contrary to the discourse that microfinance helps individuals overcome
exclusive and imperfect institutions, this section shows how the moral econ-
omy of microfinance relies upon and reinforces existing social institutions.
Through a process of demonstration, MFI staff construct moral ideals and
figures of ‘development success’, locally known as idols, to legitimize
microfinance interventions. Idols are idealized figures that represent the
‘good life’ most people desire and are used by MFI agents as examples for
other clients to follow. They are seen as embodying both virtue and material
prosperity, where the latter can be cast as a fruit of the former. The erection
of simple figures to be revered by their contemporaries for their economic
and moral merit reveals a creative bricolage that intertwines powerful eco-
nomic motivations, spiritual sentiments and religious norms surrounding
duty and piety. Idols make ‘better choices’ and are able to fulfil their moral
obligations to their families: for men this means successfully looking after
their families, and for women it means performing and conforming to moral
expectations. By linking microfinance and morality in this way, borrowing
from MFIs is normalized and becomes a moral act in its own right. Not
taking out loans or not engaging with MFIs is hence seen as a risky strategy,
an immoral choice, and as the wrong thing to do. As a result, microfinance
for the rural poor takes on moral meanings embedded within traditional
social institutions.
10 Mathilde Maîtrot
Valuable Idols
In all four villages, microfinance was first introduced by agents who were
strangers to the local communities. In many ways, the idea of poor women
taking loans from formal institutions headed up by strangers — and often
male strangers — belied the proper ‘order of things’ (Devine and White,
2013: 134). Several regional managers and branch managers reported that
the major challenge they faced was to preserve a good relationship with
the general public. A regional manager who has worked for an MFI since
1974 reported that at the start, microfinance organizations put greater em-
phasis on the need to communicate and socialize with the public ‘because in
the end’, he explained, ‘it is the responsibility of the loan officers to con-
vince clients to participate’.3Respondents described how, when microfi-
nance agents started recruiting clients in their village, people were wary
of being visibly associated with something unknown and potentially contro-
versial. An elderly respondent and former microfinance client remembered
when microfinance agents first came to his village:
There is a proverb in Bangla: ‘if you put a candle close to a fire it will melt’. It is the same
between men and women. Credit officers come to our houses to collect loans, but you can
never say who they really are inside. Over the course of a year, this man will develop a
relationship with the family, be in regular contact with its women. You do not know what
sort of glances he will give and to who and it is natural that a young man’s behaviour can
slip. This creates an opportunity to do something wrong — ethically and religiously. So, if
we have the opportunity to avoid it, why don’t we?4
Microfinance agents are aware of the perception that loans may challenge
power dynamics within households, making male household members par-
ticularly wary of microfinance and therefore less likely to participate. Male
household members, conforming to their guardian role, act as gatekeepers
and are generally distrustful towards unfamiliar men entering their home-
stead. Indeed, men sometimes express frustration at the fact that loans are
given in women’s names, as a middle-aged man Masud described:
The loans should be in the man’s name, because women stay under the men and they don’t
even earn. They don’t even know how to earn. I don’t know what they think, but to me it
should be in the man’s name then they will feel the pressure and will work hard. The women
live in the house and feel afraid when the people of these institutions come to their house.5
Such attitudes constituted a considerable challenge for microfinance
agents. Taking a loan with interest is often perceived or presented as
conflicting with Sharia law and the Islamic banking system, which is pred-
icated upon challenging the asymmetrical contractual relationship between
3. MFI Regional Manager, Tangail District, 25 April 2011.
4. Former microfinance client, Tangail District, 21 February 2011.
5. Former microfinance client, Tangail District, 20 February 2011.
The Moral Economy of Microfinance in Rural Bangladesh 11
borrowers and lenders. Risks borne by borrowers in microfinance loan con-
figurations are generally considered disproportionate according to Islamic
law. Such principles and moral value systems permeated religious bound-
aries, with other religious groups also reportedly feeling hesitant about par-
ticipating. In the case study villages, the majority of rural households were
initially reluctant to borrow, casting microfinance borrowers as immoral.
We know that global development projects develop local legitimacy
through adaptation and ‘translations’ to fit specific contexts (Ferguson,
1994; Mosse and Lewis, 2006; Radhakrishnan, 2015; Sharma, 2008). In
this case, faced with the challenges explored above, microfinance agents
over time deployed discursive tactics to normalize the practice by aligning
it to traditional gender norms, thereby skilfully navigating the local social
institutions. It is important then to recognize that the discretionary power
of credit agents is often central to shaping the moral economy of microfi-
nance (and can be argued to create a ‘practice drift’ at the frontline of MFIs
in Bangladesh; see Maîtrot, 2019). This normalization was achieved as part
of the wider commercialization of the sector, in a variety of ways. The first
encounter between a microfinance agent and a client typically occurs at the
potential client’s homestead with credit officers addressing male household
members and often deliberately excluding the future client (i.e., the woman)
from initial exchanges. This is in part a tactic that shows respect to the head
of the household, while allowing the agent to introduce him/herself. Speak-
ing to the female members of a household without requesting the household
head’s permission would be considered an insult to him.
Microfinance agents make a rapid informal judgement about sources of
potential tensions between their aim to formalize loans and a household’s
view of the ‘proper order of things’. This judgement takes the level of vul-
nerability and poverty of a household into account, based on the size and
condition of the homestead, the quality of clothes worn by the household
members and the number of assets at their disposal. Another element af-
fecting the agents’ judgement is the religiosity of the household members.
This requires them to recognize contextual religious and cultural codes, ‘the
material and ideological resources and practices of households and families’
(Standing, 1991: 12). As well as reading people’s verbal and body communi-
cation, agents can observe the degree to which purdah is enforced. Religious
clothing can be used as part of a wider set of symbols to signal piousness
and religiosity (hijab or veil, tupi, Islamic beard and so on). From this in-
formation, agents infer the nature of kinship, interpersonal relationships and
gender hierarchies characterizing the household.
In order to reconcile microfinance with local institutions negotiated by a
household, agents often portray microfinance borrowing as serving the ex-
isting social institutions and their associated norms and morals. As noted,
a key means used by agents to recruit as well as retain microfinance clients
is constructing and telling stories of idols. Idols embody development suc-
cess and depict accounts of individuals (generally male) or households that
12 Mathilde Maîtrot
have established prosperous businesses that enable them to provide for their
families. In this context, idols take on almost legendary status with tales
of success being spread to nearby villages. Clients may not have met these
idols, but they will have heard of them and of their success stories. Nus-
rat Jahan, an elderly widow, described how microfinance agents ‘inspired’
poor households to take loans through songs and stories about idols. She
remembers Grameen Bank fieldworkers coming to her village in the 1980s
and singing ‘a song about how loans can change our lives. That persuaded
us to join, and I managed to make a group of five members’.6During
participant observation, as well as the six focus groups, respondents told
stories of households who became dhoni manush (wealthy people) by using
loans. Nazma (35) a current client of four MFIs, explained: ‘We see a few
successful people here and there, if you go to this place in Uttarnagar you
will see lots of cows over there. This one guy started with BDT 30,000 and
now he has grown so big. He has a huge farm. He is rich. These stories
convince us to take money’.7
Accounts of idols generally focus on the successes of men. This rhetoric
plays to the gendered image of the self-made entrepreneurial man (Gun-
nerud, 1997), invoking their family obligations to animate men to participate
in microfinance. Men living in poverty often opine that they are not able
to meet their moral obligations to attend to the needs of their mother,
father, wife and children. Narratives about idols portrayed as honourable
and principled men able to fulfil their moral duties with regard to their
dependants, make borrowing and lending from microfinance institutions an
obvious or rational option. Microfinance participation therefore becomes
the magic bullet for men anxious to fulfil their moral obligations towards
their families. Refusal to participate then meets with the disapproval of
credit officers, held up as an immoral decision, a betrayal of moral respon-
sibility. Most male respondents reported having been encouraged by credit
officers to allow their wives to access loans so that husbands could use
the money as they see fit. In this way, their wives’ modesty (extra-familial
interactions outside their neighbourhood) is not affected and men are seen
as good guardians, doing all they can to look after their households. Indeed,
many men considered it a point of honour that their wives did not directly
use the loan themselves, maintaining the norm that important financial
dealings are men’s responsibility. As a result, taking on loans via wives gave
men the opportunity to retrieve a ‘moral status’ as provider and guardian
of the household. This was important for men themselves but also for the
household’s reputation in the immediate community, as ‘male guardian-
ship’ is considered socially an indicator of ‘the order of things’ (Maîtrot,
2017). Such stories of idols are therefore powerful idioms and symbols that
6. Interview, Tangail District, 17 February 2011.
7. Focus group discussion, Tangail District, 1 March 2011.
The Moral Economy of Microfinance in Rural Bangladesh 13
legitimize and diffuse the idea of borrowing in order to improve livelihoods
as socially acceptable and morally compelling.
Microfinance agents play an active role in constructing and instrumen-
talizing idols as symbols of success. The case of Joynuddin and Monowara
illustrates this well. In 1989, shortly after Joynuddin had decided to quit his
MFI (on his wife’s behalf) because — as he described it — his business was
prosperous and he no longer needed it, another MFI visited him to recruit
him as an idol. They had heard about him and wanted to convince him to
take more loans. So, he agreed and borrowed BDT 5,000 and then BDT
10,000. He managed to repay the latter loan but with great difficulty. Once
he had repaid, he again decided to quit. However, in his view, microfinance
agents did not want to let him go because he was still a ‘good client’ and the
community looked up to him and considered him an example of success —
someone who had met all his moral obligations. Holding on to the couple’s
savings, the microfinance agents told him that by quitting he would make it
more difficult for them to recruit and retain clients. As this case suggests,
idols provide critical narratives that legitimize and normalize microfinance
activities.
The identification of and reference to idols was effective in all four vil-
lages I studied, influencing villagers’ aspirations and behaviour. While the
decision to participate in microfinance is often seen as indicative of ‘pro-
gressive’ character traits in clients (risk taking, entrepreneurialism, chal-
lenging social norms and so on), in the villages I studied a large part of the
decision-making process for individuals was driven by imitation and fol-
lowed examples set by peers (Khandker et al., 1998: 108). Indeed, the ma-
jority of microfinance clients (or their husband/father/brother or other male
guardian) perceived loans as an opportunity, not to do something new or
innovative, but to reproduce or imitate what an idol had previously done.
These dynamics are not dissimilar to those identified by Kar and Schuster
(2016) in India and Paraguay. In the area where I conducted fieldwork, it
was, for example, common for most respondents’ husbands to indicate that
they wanted to use loans to start a chicken or cattle farm ‘like this man in
Dhanbari [a nearby town]’. Or as one respondent, Kamal, put it, ‘I simply
followed the others. Whatever they were doing I trusted them, and I also
did the same. If I saw someone taking loans and doing well, I also followed
him to get the same successes’.8These examples thus indicate how MFIs re-
lied on narratives of idols to minimize the perception of risk associated with
becoming an MFI borrower (Radhakrishnan, 2015; Weber et al., 2004). In
so doing credit agents pursue their own interests and the interests of their
organizations by presenting credit borrowing as following the example of
morally good community members.
8. Focus group discussion, Tangail District, 19 February 2011.
14 Mathilde Maîtrot
Borrowing as Caring
Normally, when a male household member agrees to participate in microfi-
nance, a woman in his household is required to consent and ‘give her name’
so he can access loans. Most of the clients interviewed were married women
who had moved from their natal village (baper bari or ‘father’s village’) to
their husband’s (patri bari or husband’s village) as is local custom (Bala-
subramanian, 2013). In this process, they join a new network (Chowdhury,
2010; Rozario, 1992) and assume a new identity as a notun bou (young
bride), soon to become a mother (White, 2017). As discussed earlier, with
marriage comes a set of obligations and care duties towards the new family.
For women in the villages studied, a motivation for giving formal consent
to MFIs was to perform according to expectations, to fulfil their moral obli-
gations. This often took the form of safeguarding morality, improving their
status within the household, and ensuring bad reputation (durnam) does not
fall on the household.
For women, accessing loans is often considered a way of demonstrating
love and respect to their guardians. The ‘order of things’ within households
is implicitly defined by reciprocity through which individuals prove the le-
gitimacy of their membership. Within large extended households, for exam-
ple, the legitimacy of a couple (son and daughter-in-law plus dependants)
within the family unit is often at risk if they are perceived to be insufficiently
contributing to the economic life of the household. Like many women I met,
Naseema said she had taken MFI loans ‘out of love for my family, because
my husband requested I do so’.9A particularly common motivation for tak-
ing loans was the health, medical and well-being needs of elderly shashur
and shashuri (father and mother-in law, respectively). In this context, ful-
filling and performing a ‘moral duty’ by adhering to patriarchal norms and
agreeing to take on loans is imperative for women seeking to maintain good
relationships within the household and to preserve or improve their access to
security through male guardianship. Failing to meet expectations (or failing
to demonstrate a willingness to meet them) is often interpreted as a trans-
gression of social norms and risks the withdrawal of male guardianship.
Over time microfinance has also become a means through which women
compete and demonstrate their deservedness of guardianship. The fact that
other young brides borrow creates an environment where comparisons are
drawn across households, and over time microfinance borrowing becomes a
socially accepted practice and a norm. Female respondents often explained
that they felt pressured to take loans, and that taking loans was a new means
of fulfilling social expectations, including their expectations of themselves.
The extent to which microfinance participation has become a norm has
increased as the market has become saturated, putting pressure on credit
9. Interview, Tangail District, 1 March 2011.
The Moral Economy of Microfinance in Rural Bangladesh 15
agents to recruit and retain clients (Maîtrot, 2019). Between five and eight
MFIs were operating in each of the villages studied because the appetite
for microfinance is high and the field competitive. This is not uncommon in
Bangladesh, with the poor often having better access to microfinance than to
basic state services (Rutherford, 2009). Credit agents are therefore in fierce
competition and seek advantage by reminding borrowers of their ‘duty’
to their households, suggesting that refusing to participate will harm their
personal reputation in and outside of the household. If this approach fails,
then credit agents will approach husbands or male guardians and remind
them that their wives may be falling short in their duties. With two-thirds of
the populations of the villages actively borrowing or having borrowed from
microfinance organizations, the decision to borrow represents a means to
adhere to local norms.
The effects of this approach can be strongly felt at the household level.
For example, daughters-in-law commonly express love by sacrificing their
well-being for that of their guardian(s) and children, and clients reported that
by refusing to participate, their guardian would compare them unfavourably
with other new wives in the vicinity or daughters-in-law in the households
who did agree to take or top-up loans. We thus see a competition between
female members of the households, anxious not to be seen as ‘less caring’.
Credit agents and husbands reinforce these expectations. Some women re-
ported that when credit agents heard of their reluctance to ‘give their name’
for their husband to access loans, agents would ‘convince’ them, either di-
rectly or using husbands as intermediaries, by emphasizing their duty of care
towards their family and their moral duty to support their husband.
In the case of elderly widows, this power configuration might differ. In
poor households, after the death of the father, the mother will often become
dependent on the guardianship of her son(s). If the parents were living in-
dependently from a son’s household, the mother will often try to recover her
son’s guardianship because he would traditionally have a moral duty to care
for her. In this setting, daughters-in-laws can refuse to ‘give their name’ for
a loan and encourage their husbands to ‘request’ their mothers to borrow
for them. Since microfinance debts are often written off after the death of
the client, asking an elderly woman to take out a loan could point to a prag-
matic shift of caring responsibility on the part of the daughter-in-law. Loans
offer an infrastructure for sustaining or regaining male guardianship, which
ultimately reproduces and shapes gendered norms, institutions and hierar-
chies, including sometimes by shifting responsibilities for care. In any case,
women understand that by refusing to access loans they put themselves at
risk of being denied guardianship and protection.
Although making major financial decisions is not traditionally considered
a ‘female’ responsibility or obligation (Kabeer, 1999), women’s borrowing
is at times also motivated by an aspiration to lead or support the pursuit
of small business ventures. Married women often do not want to be seen
as managing their own financial affairs as that is considered a husband’s
16 Mathilde Maîtrot
duty. They often claimed that performing humility and risk aversion consti-
tuted important features of the ‘good wife’. In spite of this, some harboured
aspirations to pursue or support economic ventures. Women reported that
they too could contribute financially to the fortune and well-being of their
households. Loans were therefore sometimes used by women to purchase
land, rickshaws and livestock or rent and work land (borga, sharecropping).
In practice, however — and as has been widely documented — loan use is
often diverted towards so-called ‘non-productive’ purposes, or ‘consump-
tion loans’ such as medical costs, emergency home repairs, wedding costs
and dowry (Ahmed et al., 2001; Goetz and Gupta, 1996; Kabeer, 2001;
Roodman and Morduch, 2014). These uses of loans are often contentiously
presented by researchers as ‘irrational’ (Carvalho et al., 2016), but also by
other villagers as ‘bad choices’. Presenting these choices as irrational be-
cause they do not strictly conform to the idea of what being an entrepreneur
means, depoliticizes the context within which poor women make ‘choices’
and ignores the moral trade-offs they often face. Many female respondents
reported ‘not being able to use the loan properly’ because they have to take
care of their children, husband and in-laws — for them a moral and prag-
matic pursuit of the duty to care. Women expressed feeling caught between
two competing expectations: on the one hand, they are expected to repay
their loans (and avoid public shame) and on the other hand, they are pres-
sured to use the repayment money (or the entire loan) to fulfil their ‘duty of
care’ towards their families.
CONCLUSION: MORALITY AND DEVELOPMENT
Globally, the expansion of microfinance in development has been built on
a discourse of female empowerment and poverty reduction. However, this
article has shown how microfinance’s expansion in practice has relied much
more on local discourses, crafted by credit agents, in which borrowing
paradoxically conforms to existing patriarchal and hierarchical social insti-
tutions, ultimately neutralizing ideas of social change. Actors ‘for whom
development constitutes a resource, a profession, a market, a stake or a
strategy’ (Olivier de Sardan, 2005: 11; see also Bierschenk et al., 2000)
embed the idea of transformation and empowerment within existing moral
frameworks and power structures. A prominent tool to achieve this is the use
of narratives around idols as powerful symbols of modernity and morality.
In rural Bangladesh this discourse creates aspirations and expectations for
individuals to become successful and acquire greater moral status. For poor
women, taking on loans plays an important part in legitimizing their mem-
bership in the household and helps them make claims around protection
and guardianship. Morality is a compelling motivation for both men and
women who, yearning for security, attempt to imitate successful idols, and
makes microfinance participation a rational choice. However, this plays out
The Moral Economy of Microfinance in Rural Bangladesh 17
differently for men and women. As a result, microfinance borrowing, often
branded as a harbinger of values such as self-determination, agency and
entrepreneurship, ends up reinforcing existing norms and hierarchies.
The discourse around microfinance is agency-laden but often ignores the
contexts in which people ‘make choices’ — a context shaped by the cus-
toms and values favoured by the majority (Bouman, 1989) as well as by
interpersonal obligations (Gudeman, 2001). The findings highlighted in this
article raise important questions about the constitutive role of morality for
agency and for relationships. It is precisely because networks and ties of mu-
tual and relational obligations shape individuals’ identity, choices and roles
(Granovetter, 1985; Olivier de Sardan, 1999) that they protect existing social
institutions and ‘trap’ individuals (Malamoud, 1980: 14). This may trigger
a ‘Faustian Bargain’ (Wood, 2003) whereby many poor women, exposed to
pervasive uncertainties and in need of security, have to perform and meet ex-
pectations in line with dharma, in order to be considered deserving of male
guardianship. In this context, women’s agency is shaped by complex inter-
personal gendered hierarchies and webs of interdependencies. These social
relations influence the terms on which women perceive themselves and their
actions. Their perception of who they are, or want to be, is tied to how they
behave towards others. This invites us to consider agency in relational terms,
always embedded within and shaped by a process of social relationships. As
Burkitt (2016: 332) suggests, understanding agency as such acknowledges
the ‘transactional’ dimension(s) in people’s action.
This article also shows that agency is both constrained and constituted
by the performance of morality, which is related to disposition to risk and
expectations of loyalty, two notions that bear specific gendered meanings.
Relations of kinship and male patronage structure ‘the order of things’ for
women and constitute the main means of wealth redistribution (Devine
and White, 2013; Lewis, 2017; van Schendel, 2009). The choice to borrow
is not a proposition to challenge established norms and values but rather
an exercise of social imitation and moral conformity necessary to secure
guardianship. Making a choice, as Kabeer has argued (1999: 437), implies
being able to choose from a number of viable alternatives. In contexts
of poverty, exclusion and patriarchy, the availability of viable alternatives
cannot be presumed. Expectations around morality or the ‘right order of
things’ mediate choice and, as this article has argued, can increase women’s
responsibilities without necessarily transforming the norms or values that
discriminate against them. The analysis thus calls for greater attention to
be given to the significance of moral economies as sites that enforce social
imitation and moral compliance. It also reinforces the idea that current de-
velopment ideals around individual agency and empowerment can only be
enacted incrementally and if ‘morally’ legitimized at local levels. This chal-
lenges key assumptions about the relationship between development and
social change.
18 Mathilde Maîtrot
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Mathilde Maîtrot (mm880@bath.ac.uk) is a Lecturer in International De-
velopment at the University of Bath, UK. Her research examines how pol-
itics and governance shape experiences of inequality, marginalization and
extreme poverty. Her most recent work has been published in Development
and Change,Modern Asian Studies,Development Policy Review and Devel-
opment in Practice, amongst other peer-reviewed journals.
