In the past decade, microfinance programs have demonstrated that it is possible to lend to low-income households while maintaining high repayment rates--even without requiring collateral. The programs promise a revolution in approaches to alleviating poverty and spreading financial services, and millions of poor households are served globally. A growing body of economic theory demonstrates how new contractual forms offer a key to microfinance success--particularly the use of group-lending contracts with joint liability. For the most part, however, high repayment rates have not translated into profits, and studies of impacts on poverty yield a mixed picture. In describing emerging tensions, the paper highlights the diversity of innovative mechanisms beyond group-lending contracts, the measurement of financial sustainability, the estimation of economic and social impacts, the costs and benefits of subsidization, and the potential to reduce poverty through savings programs rather than just credit. The promise of microfinance has pushed far ahead of the evidence, and an agenda is put forward for addressing critical empirical gaps and sharpening the terms of policy discussion.

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The microfinance promise

In this article we develop the concept of community-based enterprise (CBE) and argue that it provides a potential strategy for sustainable local development in poor populations. We maintain that in this emerging form of entrepreneurship, typically rooted in community culture, natural and social capital are integral and inseparable from economic considerations, transforming the community into an entrepreneur and an enterprise. Drawing on interdisciplinary and multilevel approaches, we propose a theoretical model of the determinants, characteristics, and consequences of CBEs.

https://www.jstor.org/stable/pdfplus/20159204.pdf

Toward a Theory of Community-Based Enterprise

International Journal of Business and Management

We explore the determinants of domestic violence in two rural areas of Bangladesh. We found increased education, higher socioeconomic status, non-Muslim religion, and extended family residence to be associated with lower risks of violence. The effects of women's status on violence was found to be highly context-specific. In the more culturally conservative area, higher individual-level women's autonomy and short-term membership in savings and credit groups were both associated with significantly elevated risks of violence, and community-level variables were unrelated to violence. In the less culturally conservative area, in contrast, individual-level women's status indicators were unrelated to the risk of violence, and community-level measures of women's status were associated with significantly lower risks of violence, presumably by reinforcing nascent normative changes in gender relations.

Women's status and domestic violence in rural Bangladesh: individual- and community-level effects.

Micro-finance programmes are currently dominated by the ‘financial selfsustainability paradigm’ where women’s participation in groups is promoted as a key means of increasing financial sustainability while at the same time assumed to automatically empower them. This article examines the experience of seven micro-finance programmes in Cameroon. The evidence indicates that micro-finance programmes which build social capital can indeed make a significant contribution to women’s empowerment. However, serious questions need to be asked about what sorts of norms, networks and associations are to be promoted, in whose interests, and how they can best contribute to empowerment, particularly for the poorest women. Where the complexities of power relations and inequality are ignored, reliance on social capital as a mechanism for reducing programme costs may undermine programme aims not only of empowerment but also of financial sustainability and poverty targeting.

Tackling the Down Side: Social Capital, Women's Empowerment and Micro-Finance in Cameroon

Abstract There is a growing acknowledgement that micro-credit programs have potential for equitable and sustainable development. However, my anthropological research on the micro-credit program of the Grameen Bank shows that bank workers are expected to increase disbursement of loans among their members and press for high recovery rates to earn profit necessary for economic viability of the institution. To ensure timely repayment in the loan centers bank workers and borrowing peers inflict an intense pressure on women clients. In the study community many borrowers maintain their regular payment schedules through a process of loan recycling that considerably increases the debt-liability on the individual households, increases tension and frustration among household members, produces new forms of dominance over women and increases violence in society.

A. Rahman

Papers

Micro-credit initiatives for equitable and sustainable development : who pays?; a case study of the Grameen Bank Program in rural Bangladesh