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The Equity and Efficiency of Microfinance

Deakin Papers on International Business Economics

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Title The Equity and Efficiency of Microfinance
 
Creator Kanga, Mahazarin
Bansal, Juhi
Verma, Siddharth
Bandaranayake, Ishani
 
Description Banks are for people with money rather than for people without money. However, microfinance is banking for the unbankables. It brings credit, loan, savings and other essential financial services within the reach of millions of people who are too poor to be served by regular banks, i.e. almost 60-90% of the global population. It is one of the most intriguing features of financial economics today. In the aftermath of the 2006 Nobel Peace Prize being awarded to the Bangladeshi, Mohammed Yunus, who is a champion of the cause for microcredit, the common presumption has been that microfinance create s undeniable social benefits such as poverty alleviation and more equal social opportunities. Indeed, this is true to a large extent; however, less acknowledged are the problems that lurk behind this facade of ‘social service’. Donning the caps of economists, this pa per discusses the economic rationality of microfinance as an effective tool for achieving poverty alleviation. We ask the question on whether the theoretical objective of microfinance for ‘helping the poor’ is sullied in practice by rent seeking, profit seeking and corruption. We assess the fundamental economic model for the basis on which Microfinance Institutions (MFIs) provide loans to the poor and as whether the poor people eventually benefited from this financial innovation.
 
Publisher Deakin University
 
Contributor —
 
Date 2010-07-01
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
—
 
Format application/pdf
 
Identifier https://ojs.deakin.edu.au/index.php/dpibe/article/view/188
10.21153/dpibe2010vol3no1art188
 
Source Deakin Papers on International Business Economics; Vol 3, No 1 (2010); 11-17
2206-4060
 
Language eng
 
Relation https://ojs.deakin.edu.au/index.php/dpibe/article/view/188/193