Testing the Tools of Development: Credit Programmes, Loan Involvement, and Women's Empowerment

Summary The effectiveness of a credit programme at empowering women depends on the success with which it defines for itself and its workers ways to challenge, while working within, the constraints on women's empowerment that may exist in the borrower's country. Support for this argument is found in the case of rural Bangladesh. Statistical evidence demonstrates the importance of a borrower's involvement in the labour, selling and accounting for the activity funded by her loan for increasing the likelihood that credit leads to empowerment. For organizations that choose to make women's empowerment their guiding goal, borrower involvement in the loan?funded activity is an understandable and measurable goal that has demonstrated impact on women's empowerment. RESUME Tester les outils du développement: les programmes de crédit, la participation aux prêts, et l'habilitation des femmes En termes de l'habilitation des femmes, l'efficacité des programmes de crédit dépend de la mesure dans laquelle ces programmes sont capables de définir, pour eux?mêmes et pour leurs travailleurs, des moyens de contester les contraintes sur l'habilitation des femmes qui existeraient dans le pays emprunteur, tout en évitant ces contraintes au niveau de la pratique. Le cas du Bangladesh rural milite en faveur de cet argument. L'évidence statistique démontre l'importance de la participation d'une emprunteuse dans le travail, les ventes et la comptabilisation même des activités financées par son prêt afin de maximaliser les chances que les crédits mèneront à l'habilitation de cette femme. Chez les organisations qui décident que leur but directeur est effectivement l'habilitation des femmes, la participation des emprunteuses dans l'activité financée par ce prêt représente un objectif à la fois compréhensible et mesurable, dont l'impact sur l'habilitation des femmes ne reste plus à démontrer. RESUMEN Los instrumentos de desarrollo puestos a prueba; programas de crédito, desarrollo y poder de decisión en la mujer La efectividad con que un programa de crédito confiere poder a la mujer depende del éxito con el cual este programa enfrenta, desde adentro, las restricciones que puedan existir en este aspecto en el país prestatario. Una prueba de este argumento se encuentra en la zona rural de Bangladesh. La evidencia estadística demuestra la importancia de la participación de prestatario/a en el proceso de trabajo, venta y contabilización para la actividad respaldada por el préstamo, ya que incrementa la posibilidad de que el otorgamiento de crédito lleve al otorgamiento de poder. Para las organizaciones que tienen como meta principal el otorgamiento de poder a la mujer, esta participación prestataria es un objetivo posible y ha demostrado tener una gran importancia en el proceso

Assessing the impact of microfinance programming on children: an evaluation from post-tsunami Aceh

This paper presents an evaluation of the long‐term impact of microfinance programmes on Acehnese children during the post‐tsunami recovery. The study, conducted from June to August 2010, examined the impact of microfinance programming six years after the tsunami. The sample consisted of 185 microfinance participants, with a comparison group of 192 individuals who did not participate in microfinance programmes. All respondents were parents, interviewed through a structured survey. The study used four child protection indicators—diet, health, childcare and education—in contrast to traditional repayment rate indicators. The primary results were insignificant with respect to all four child protection indicators, suggesting that, with respect to these indicators, there was no long‐term difference between the impact of microfinance on beneficiaries' children and non‐beneficiaries' children. These findings signify a need for microfinance actors to move beyond traditional indicators of economic success to evaluate the social changes microfinance programmes are presumed to effect

Human Worth as Collateral

Human worth has taken on a surprising new role: that of market asset. Specifically, lenders in radically different contexts are using their borrowers’ human worth as collateral in loan transactions. The two examples of this new collateralization that I examine are credit card lending in the United States and microlending programs in the Third World. I conclude that the use of human worth in these two contexts is too similar to be coincidental. Rather, this new collateralization is a product of globalization. For those interested in the effect of law on globalization, this convergence in the market for credit teaches important lessons. In both the contexts I examine, the laws governing secured and unsecured lending fail to recognize human worth as collateral. For this reason, the new collateralization serves as a counter-example to the claimed centrality of the rule of law in economic development

Financial Inclusion and Financial Stability: Current Policy Issues

The recent financial crisis has shown that financial innovation can have devastating systemic impacts. International standard setters' and national regulators' response has been a global concerted effort to overhaul and tighten financial regulations. However, at a time of designing stricter regulations, it is crucial to avoid a backlash against financial inclusion. In this chapter, we argue that greater financial inclusion presents opportunities to enhance financial stability. Our arguments are based on the following insights: Financial inclusion poses risks at the institutional level, but these are hardly systemic in nature. Evidence suggests that low-income savers and borrowers tend to maintain solid financial behavior throughout financial crises, keeping deposits in a safe place and paying back their loans. Institutional risk profiles at the bottom end of the financial market are characterized by large numbers of vulnerable clients who own limited balances and transact small volumes. Although this profile may raise some concerns regarding reputational risks for the central bank and consumer protection, in terms of financial instability, the risk posed by inclusive policies is negligible. In addition, risks prevalent at the institutional level are manageable with known prudential tools and more effective customer protection. The potential costs of financial inclusion are compensated for by important dynamic benefits that enhance financial stability over time through a deeper and more diversified financial system. In the following pages, we present the current state of financial inclusion globally. We also explore some trends in financial inclusion and what the most effective policies are to favor it. In doing so, we suggest that innovations aimed at countering financial exclusion may help strengthen financial systems rather than weakening them

Micro-credit NGOs and Strategic Trust: An Odd Couple?

This study contributes to the micro-credit literature by addressing the lack of philosophical dialogue concerning the issue of trust between micro-credit NGOs and rural poor women. The study demonstrates that one of the root causes of NGOs’ contested roles in Bangladesh is the norm that they use (i.e., trust) to rationalize their micro-credit activities. I argue that Bangladeshi micro-credit NGOs’ trust in poor village women is not genuine because they resort to group responsibility sustained through aggressive surveillance. I maintain so by drawing on a trust-based theoretical framework that uses various philosophical insights. Drawing on the same conceptual framework, I also contend, somewhat softening the previous claim, that if micro-credit trust is trust at all, it is at most strategic, not generalized. For being strategic, it has many undermining effects on local social solidarity norms, rendering Bangladeshi micro-credit NGOs and strategic trust an odd couple with no moral compass. To bring forth the moral impetus in micro-credit activities, I lay out some recommendations intended for organizations, managers, and policymakers, consistent with normative corporate social responsibility initiatives. However, further studies can be initiated based on this paper, suggesting its importance for future research

Financial Stability: The Significance and Distinctiveness of Islamic Banking in Malaysia

This paper explores the significance of Islamic banking in Malaysia for stability in the country's economy as a whole. Neither conventional theory nor Islamic economics puts forward a systematic explanation of financial intermediation; consequently, neither is capable of identifying destabilizing elements in the system. Instead, a flow- of-funds approach similar to Minsky's own is applied to the (post-) modern consumption-led) business cycle and financial (and asset) market. Malaysia's structural current account surplus contributes to the overcapitalization of domestic firms. This in turn finances a financial (as opposed to an industrial), consumptionled (instead of investment-led) business cycle, where banking favors destabilizing asset price inflation. Islamic banks operating interdependently with conventional ones contribute to economic destabilization channeling surplus funds from the corporate to the household sector