Microfinance: The Next Bubble?

re: Microfinance: The Next Bubble?

inoklee — Tue, 30 Jun 2009 18:05:21 GMT

According to the two tapes of 60 minutes: China's Sovereign Wealth Fund and

AIG:We Own It, Red China has reserves of 1.5 trillion dollars and AIG lost

1.5 trillion dollars from 27000 deals.

re: Microfinance: The Next Bubble?

inoklee — Tue, 30 Jun 2009 18:06:45 GMT

According to the two tapes of 60 minutes: China's Sovereign Wealth Fund and

AIG:We Own It, Red China has reserves of 1.5 trillion dollars and AIG lost

1.5 trillion dollars from 27000 deals.

re: Microfinance: The Next Bubble?

tammyj — Thu, 02 Jul 2009 09:17:29 GMT

Micro finance sector is booming throughout the world. In India, government passed a micro finance bill to develop the segment. Likewise, institutions came across providing a helping hand. For e.g., FINO is an Indian entity that provides world-class technology and innovative services to Banks & MFIs that serves the rural sector through out the world.

re: Microfinance: The Next Bubble?

AlyKhanSatchu — Sat, 04 Jul 2009 17:57:28 GMT

"Strikingly," write Roodman and Morduch, “30 years into the microfinance movement we have little solid evidence that it improves the lives of clients in measurable ways.”

This is a plain absurd conclusion. I live in Kenya and Jamii Bora and the likes of Equity Bank are clear as day examples of upliftment.

The truth is that Lending to the World's Poor is probably the best risk adjusted lending in the World, right now. Folk at the bottom of the Pyramid consider it their one and only lifeline and there are many instances of People starting from here and getting a great deal further. You have to be wilfully blind not to recognise the empirical data.

Aly-Khan Satchu

www.rich.co.ke

Twitter alykhansatchu

re: Microfinance: The Next Bubble?

cybergabi — Tue, 07 Jul 2009 12:32:17 GMT

This basically confirms what Anil Karnani, University of Michigan, already proposed in 2006: http://deepblue.lib.umich.edu/bitstream/2027.42/41223/8/1035-Karnani.pdf

While microcredits might help those people who obtain them, on a large scale it needs more to uplift an economy. Not every person is a good entrepreneur, nor does every person want to be one. Most people rather need proper education and the chance to get a proper job. And that can only be obtained if industrialized countries don't primarily think of the 'bottom of the pyramid' as markets to sell to (like Prahalad suggested), but rather as suppliers to buy from. At fair rates. That would create effective, responsible and sustainable wealth and growth.

re: Microfinance: The Next Bubble?

danboarder — Tue, 14 Jul 2009 10:41:56 GMT

"Microfinance may help some lenders through hard times, tiding them over in lean periods, but the studies that show microcredit is a market-based tool to help the poor hoist themselves out of want are based on data that are hard to verify and, in some cases, flawed.."

Hey Mac, I think you meant "borrowers" in the above sentence. Poorly researched as it is poorly written, this article could minimally consider extensive research and reports by http://www.microcreditsummit.org , http://cgap.org , and http://www.seepnetwork.org etc to see extensive documentation on the real network effects of wealth creation through microfinance, resulting in improvements in health, education, and community development.

They may have a valid critique of the Bangladesh study, but that does not speak for millions of other microfinance clients around the world. Beyond academic research compiled from afar, I have personally visited micro-enterprise projects funded by microfinance services in Haiti, Mexico, Bolivia, Ecuador, Chile, and Indonesia to name a few. I have witnessed the resulting economic empowerment first-hand. Parents expand their businesses and can now afford better healthcare, and increased incomes in the community translate into better schools and infrastructure development.

Dan Lundmark, http://twitter.com/danboarder

re: Microfinance: The Next Bubble?

Liz_Lemon — Fri, 17 Jul 2009 11:07:05 GMT

I wholeheartedly disagree with Mac's opinion.

Mac's main blunder is that he blurs the distinction between microcredit (small loans to poor people) with microfinance (ensuring the poor have access to a full suite of financial services INCLUDING microcredit loans).

A working paper written by four MIT economists, which details the first large-scale, randomized trial completed to test the effectiveness of microfinance, was recently released. It finds that areas with access to microfinance exhibit a substantial increase in both the number of businesses and in business profitability as compared to their peers who do not have microfinance availability. The study also reports an increase in durable goods expenditure (as the poor invest in their new and existing businesses) as well as a decrease in the consumption of "temptation goods" (alcohol, cigarettes, gambling, take-out food) by both previous and new business owners.

These findings, which were all statistically significant, show that microfinance is an effective method of eradicating hunger and poverty. Mac should re-check his sources.

re: Microfinance: The Next Bubble?

Liz_Lemon — Thu, 23 Jul 2009 04:47:45 GMT

Morduch recently wrote an article about study replication (http://financialaccess.org/node/2067). In this note he addresses the incorrectness of the above article as follows:

"Roodman and I don't conclude that microcredit does nothing: we conclude instead that you just can't tell in these data from Bangladesh. It's an important distinction."

Mac, I hope that you take this into consideration, write a follow-up to the above piece, and own up to the fact that your damning evidence was incorrect. Microfinance does help people, and it's articles like yours that serve to hinder the great progress that the MFIs are making.