Why microfinance fails

Jason Hickel, fellow at the London School of Economics, tells Stefania Palma, Asia editor of The Banker, what the limitations of microfinance are and why, contrary to popular belief, it can be ineffective, if not harmful.

[@4ninesofreliability779]

Education along with money will solve many failures

[@hus390]

The title is misleading.

[@MA-vw1pl]

Banking can be a casino to the financially illiterate. They are guaranteed to lose. Microbanking is just a microcasino. Same results

[@user-yg9ue7rx2i]

Thank you so much

[@Cons4Zachy]

I like the thought on why it fails but I believed this was from the lenders side but seems more for the borrower. Where I live, microlenders are almost a last resort because of the "infinite interest rate".

[@gusdariel8171]

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[@titaneden7825]

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[@gusdariel8171]

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[@titaneden7825]

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[@ndenkuesson6823]

So what's the alternative for providing financial services to the poor? Some economists suggest cash transfer s.

[@Mimi-nr6jx]

Exactly…cash transfers increase household welfare and boost local aggregate demand. But for productive SMEs, there should be long-term low-interest loans with other institutional support like access to markets, knowledge transfer, etc

[@sultanirfani007]

Right boss

[@mustangmike8515]

In order to open a successful business you have first plan a good strategy and make a complete market study, and all that costs money, otherwise you will open a random business (coffee shop, pizza restaurant, grocery store) and never find a target customer. I learned that when I opened my travel agency (with no money and no planning) and after 1 year i had to close because there was no travelers (there was too much offer and to enough demand). Not everyone are business people and not all business are successful (probably just 20% are in the real world). What Poor people really need is a steady job and good education, not loans for opening an unsuccessful business.

[@ndenkuesson6823]

I agree with you. But what you forget is that microfinance loans initially was given to support people livelihoods (crop production and livestock keeping, off-farms businesses linked to specific communities) that these communities have been practicing for centuries. Saying that microfinance don't work is thinking that it's supposed to solely derive results yet everything is interrelated. No policy or program work on it own. Microfinance is integrated in systems (economic, political, social, farming,cultural ) so it might be good but one should always look at how well it integrate with other systems.

[@florianberger1932]

so how do you explain Grameen bank and it‘s many copies around the world? Have you even red Banker to the poor?

[@MrRaulstrnad]

the situation is extremely complex Grameen bank itself, although beloved by the chattering ruling classes of the West, has some deep structural issues that some argue leads to the exploitation of the uneducated poor

[@goldnutter412]

How it is being talked about back then... What I wanna ask about MF world.. how short a period can be borrowed for at some stupid APY that is actually such a small debt because seconds or subsecond ? is this specialized area in SWIFT gpi public info anywhere yet ? when is TMP and how do self sovereign types like me who spent all my retirement on assets thanks to AU giving it to us under the situation

[@yttean98]

solving global poverty summaries in one phrase, solving the basic unfairness of global economy @ 7.50min. Also, why don't these researchers go and study how China solves the poverty problem, the problem is the Western ego.

[@yttean98]

The problem is too many studies and not many implementers to proposed solutions.

[@laxshooter15]

China solved their poverty issues by have their extreme poor move to urban areas where they could find better paying jobs.

[@yttean98]

@@altseanburma3892 Inequality is everywhere, worse in the USA if there is so much inequality in China why are they so many poor people lifted out of poverty in China.

[@sohailalmani5514]

I'm worker of microfinance foundation in Pakistani Any one job for my self in other countries

[@kaal_har]

@@ENXJ 😂😂😂😂

[@tothemoon8465]

Bitcoin solves this. Look it up.