Examines the motivation for achievement as a psychological factor that shapes economic development. Refuting arguments based on race, climate, or population growth, the book instead argues for cultural customs and motivations - especially the motivation for achievement - as the major catalysts of economic growth. Considering the Protestant Reformation, the rise of capitalism, parents' influences on sons, and folklore and children's stories as shaping cultural motivations for achievement, the book hypothesizes that a high level of achievement motivation precedes economic growth. This is supported through qualitative analysis of the achievement motive, as well as of other psychological factors - including entrepreneurial behavior and characteristics, and available sources of achievement in past and present highly achieving societies. It is the achievement motive - and not merely the profit motive or the desire for material gain - that has advanced societies economically. Consequently, individuals are not merely products of their environment, as many social scientists have asserted, but also creators of the environment, as they manipulate it in various ways in the search for achievement. Finally, a plan is hypothesized to accelerate economic growth in developing countries, by encouraging and supplementing their achievement motives through mobilizing the greater achievement resources of developed countries. The conclusion is not just that motivations shape economic progress, but that current influences on future people's motivations and values will determine economic growth in the long run. Thus, it is most beneficial for a society to concentrate its resources on creating an environment conducive to entrepreneurship and a strong ideological base for achievement. (CJC)

The Achieving Society

The microfinance industry is characterized by a "schism," or debate, between two camps that represent broadly different approaches to microfinance: the institutionists and the welfarists. How this debate is resolved has crucial implications for the future of microfinance--its guiding principles, its objectives, its clients, and its impact on the poor and poverty in general. The institutionist approach, with its emphasis on financial self-sufficiency and institutional scale, appears to have gained ascendancy over the welfarist approach, with its emphasis on direct poverty alleviation among the very poor. The institutionists, however, base their arguments on a number of debatable assertions and questionable empirical methodologies. This article critically examines some of these with the intent of placing institutionist claims in their proper perspective and tempering the hegemonic aspirations of some institutionist writers. It concludes by proposing a middle ground between the two approaches in the hope that it will lead to more productive dialogue between the two camps in the future. Introduction Like many popular grassroots movements, the microfinance movement is characterized both by widespread agreement on broad objectives and by multiple rifts on key issues. The movement itself is driven by the shared commitment to provide credit for small enterprise formation and growth. It is also bound together by a common rhetoric of concern for the poor. This unity of commitment and rhetoric, however, masks a bewildering variety of philosophical approaches, types of institutions and borrowers, and delivery systems that shelter uneasily together under the big tent called "microfinance." The movement has come to be divided by two broad approaches, or opposing camps, regarding the best way to help the poor through access to financial services: the institutionist approach and the welfarist approach.(1) Jonathan Morduch (1998d) refers to this division as the microfinance schism. The irony is that while the worldviews of each camp are not inherently incompatible, and in fact there are numerous microfinance institutions (MFIs) that appear to embrace them both, there nonetheless exists a large rift between the two camps that makes communication between them difficult. The institutionist approach focuses on creating financial institutions to serve clients who either are not served or are underserved by the formal financial system. Emphasis lies on achieving financial self-sufficiency; breadth of outreach (meaning numbers of clients) takes precedence over depth of outreach (meaning the levels of poverty reached); and positive client impacts are assumed. The center of attention is the institution, and institutional success is generally gauged by the institution's progress toward achieving financial self-sufficiency. The best-known examples of the institutionist approach are Bank Rakyat Indonesia (BRI) and Banco Solidario (BancoSol) in Bolivia. Institutionists argue that a primary objective of microfinance is financial deepening, the creation of a separate system of "sustainable" financial intermediation for the poor. Theirs is a "financial systems" approach to microfinance, in which the future of microfinance is dominated by numerous large-scale, profit-seeking financial institution that provide high quality financial services to large numbers of poor clients. Because of their insistence on financial self-sufficiency, institutionists eschew subsidies of any kind. The institutionist position is articulated in virtually all the literature coming out of the Ohio State University Rural Finance Program, the World Bank and the Consultative Group to Assist the Poorest (CGAP) in the World Bank, and USAID. It is also found in the many writings of Maria Otero (ACCION International) and Elisabeth Rhyne (formerly of USAID). Most published literature in the field of microfinance espouses the institutionist view. …

Where to Microfinance

Rotating and accumulating savings and credit associations: A development perspective

Purpose – The main purpose of this paper is to review the microfinance scheme and discuss how Islamic banks can participate in such an endeavour without actually compromising the issue of institutional viability and sustainability.Design/methodology/approach – The paper is based on an extensive review of microfinance with the objective of building a case for Islamic banking to participate in a microfinance initiative.Findings – As reviewed in this paper, microfinance requires innovative approaches beyond the traditional financial intermediary role. Among others, building human capacity through social intermediation and designing group‐based lending programmes are proven to be among the effective tools to reduce transaction costs and lower exposure to numerous financial risks in relation to providing credit to the rural poor. This paper also suggests the use of a special purpose vehicle (SPV) as one of the possible alternatives for Islamic banks channelling funds to the poor.Research limitations/implicatio...

/pdf/banking-for-the-poor-the-role-of-islamic-banking-in-3kzlzogaqq.pdf

Banking for the poor: the role of Islamic banking in microfinance initiatives

http://yoksis.bilkent.edu.tr/pdf/files/10.1016-j.worlddev.2004.01.012.pdf

Social Networks and Credit Access in Indonesia

Microfinance is not a recent development, and neither is the development of regulation and supervision of microfinance institutions (MFIs). Every now developed country has its own history of microfinance. It is important to recognize this because it presents a view different from that of many in the microfinance community who associate microfinance with credit NGOs and believe that microfinance was invented in Bangladesh some 20-odd years ago. Attributing the origin of microfinance to recent initiatives misses not only the historical depth and scale of microfinance, but also centuries of experience, which means: learning from trial and error, failure and success. The beginnings in Europe were all informal and small-scale, including informal savings clubs, among them the box clubs in England during the 18th century.

https://www.econstor.eu/bitstream/10419/23549/1/2003-5_History_matters.pdf

History matters in microfinance

Forays into Islamic microfinance have been few and scattered and of limited outreach. Some have been mandated by the state, but lack popular demand, as in Iran; others have emerged in response to popular demand, but lack regulatory support by the state, as in Syria. This has provided the background for a more systematic study of Islamic microfinance in Indonesia, the largest Muslim country, where several strands of Islamic microfinance, formal and semi-formal, have evolved since 1990 in parallel. Islamic banking is now officially recognized as part of a dual banking system in Indonesia. Lacking broad popular demand, experience differs by sub-sector. Only commercial banks have successfully acquired the art of Islamic banking by training young and dynamic people, yet lack experience in microfinance. Islamic rural banks, mostly under absentee ownership, have failed to prove themselves as efficient and dynamic providers of microfinance services. Unsupervised Islamic, like conventional, cooperatives are an outright menace to their members, who risk loosing their savings. There are two options of promoting Islamic microfinance: (1) assisting Islamic commercial banks to establish units with Islamic microfinance products; (2) reassessing in a participatory process the challenges and realistic opportunities of Islamic rural banks and cooperatives, with a focus on effective internal control, external supervision, and the establishment of associations with apex services to their member institutions.

Islamic Microfinance in Indonesia: The Challenge of Institutional Diversity, Regulation, and Supervision

Agricultural development banks were established to extend credit and other financial services to customers considered noncreditworthy by the commercial banking sector. Although frequently unprofitable, they play an important role in the fight against rural poverty. This article asks if these banks should be closed or if they are worth revamping.

https://www.econstor.eu/bitstream/10419/23690/1/2000-4_S_A07b_AgDB_reform_IMF_article_.pdf

Agricultural Development Banks: Close them or reform them?

In the past, credit programmes including subsidies and neglecting savings mobilization have undermined rural finance. In recent years, the number of countries has been growing in which banks mobilize savings and practise commercial banking; but the rural poor still have to rely on informal financial institutions, which are better adjusted to local conditions. During the early 1980s, a novel approach entered into the debate: linking informal and formal financial institutions, with financial self-help groups acting as intermediaries between microentrepreneurs and the banks. This reduces transaction costs substantially, for the benefit of both. Within APRACA (Asian and Pacific Regional Agricultural Credit Association), Indonesia has been the first to implement such a pilot project. In a favourable policy climate, a project was designed which incorporates the major features of sustainability, such as reliance on institutional capacity, co-operation between governmental and private voluntary bodies and pre-exi...

Financial innovations for microenterprises – linking formal and informal financial institutions

Indonesia, the largest Muslim country, has a highly differentiated micro- and rural finance sector which has evolved over more than a century. Islamic finance has emerged in 1991, comprising Islamic commercial banks and banking units, rural banks, and financial cooperatives. In this study we deal with the emerging Islamic microfinance sector in Indonesia, particularly rural banks and financial cooperatives: how they have evolved, how they compare with conventional institutions, and what their prospects for growth are.

https://www.econstor.eu/bitstream/10419/23656/1/2006-2_INO_IslMF.pdf

Hans Dieter Seibel

Papers

History matters in microfinance

Islamic Microfinance in Indonesia: The Challenge of Institutional Diversity, Regulation, and Supervision

Agricultural Development Banks: Close them or reform them?

Financial innovations for microenterprises – linking formal and informal financial institutions

Islamic Microfinance in Indonesia