How Do Savings Groups Compare with Traditional Groups and Credit Groups?

What about “savings groups”?  Many don’t include these within “microfinance,” but Freedom from Hunger does.  They are part of our theory of change in the lives of the chronically hungry poor. Aside from the intriguing example of the moneylender in the Santa Rosa (Philippines) market who doubled as a savings collector and guard, I’ve hardly acknowledged the existence of traditional read more...

Do Women Value Microfinance Group Membership for Its Own Sake?

Is attendance at microfinance group meetings solely a cost some people, especially women, are willing to pay just to gain access to services?  Or do the women value the group, its members, and its meetings for their own sake?  Is this a benefit over and above the value of the financial or other services made available through the group?  Is this benefit real?  Is it substantial? You would t read more...

Can Some Costs of Microfinance Also Be Benefits?

The current narrative is that the poor are forced by their lack of choices to suffer the irksome costs imposed by microfinanciers in the name of business necessity.  Naturally there is much truth here, but also a few questionable presumptions about what the poor really want or don’t. Take the requirement of regular, frequent (as often as weekly) repayments of principal and interest.  A rigi read more...

Do Social Motives Make Microfinanciers a Better Option for the Poor?

Consider the diverse social motives of microfinanciers.  These drive them to go literally the extra mile and make the extra effort to serve people who are unserved.  The moneylenders and the bankers serve people from whom they can make a profit with their tried and true techniques and products.  They may often be sympathetic to their clients, and certainly as good business people, they ought to read more...

What Has Microfinance Learned from Moneylenders?

While you ponder an antidote to the notion of microfinance as just another dreary option for the poor – stuck somewhere between the advantages and disadvantages of what moneylenders and bankers have to offer – I want to close out the discussion of moneylenders vs. microfinanciers.  In a comment last week, Bill Abrams of Trickle Up reminded us of the classic 1989 paper by Bob Christen.  It re read more...

Is Microfinance Just Another Unpleasant Option for the Poor?

Microfinance wins on price in the context of the Bangladeshi, Indian and South African diary households.  It seems the context in the Philippines and Uganda is at least as favorable for microfinance.  To build our confidence in this conclusion, I really ought to find more studies of moneylenders and their borrowers in markets also served by microfinanciers.  For now, let’s assume that what I read more...

Microfinanciers Beat Moneylenders on Price, But Not by So Much?

I left you in the last post (#7) with a yawning gap between financing by the most formal providers (banks) and the least formal (friends and relatives), a gap which begs for a hybrid approach.  Enter the moneylender – seldom fitting the Shylock stereotype. The example of the Santa Rosa market in the Philippines indicates the moneylender may be a well-to-do businesswoman who feels an obligati read more...

Why Does She Go to a Moneylender?

Are microfinance providers the new moneylenders?  If we are, would that be a compliment or a condemnation?  Don’t be too quick to answer, especially if your familiarity with moneylenders is more or less limited to Shylock in Shakespeare’s The Merchant of Venice! In my last post (#6), I spent some “ink” on describing the Santa Rosa public market in the Philippines, where moneylenders c read more...

Are moneylenders a boon or a scourge upon the land?

Hey, it’s expensive to serve the poor!  Anyway, the other guys are charging even more, a lot more. Doesn’t this feel like a pretty weak defense of high interest rates in microfinance?  The “other guys” charge even more?  Even a purely commercial microfinancier suffers some embarrassment from this conundrum in microfinance—the poor have to pay more than the better off.  There’s g read more...

What constitutes good evidence?

In my last post (#4), I put out a call for evidence that the poor reduce their costs (explicit and/or implicit) by going to microfinance providers.  This request begs the question:  What constitutes good evidence?  What are we supposed to be looking for? Regarding the debate between those who seem to insist we can know nothing about impact without RCTs vs. those who seem to reject the utilit read more...