Thursday, January 17, 2013

Microfinance and Patriarchy: 'Drifts Away from Serving Women'

Microfinance -- an approach to poverty based on providing small loans and other financial services to poor people, primarily women -- has inspired extensive press coverage, a Nobel Peace Prize for founder Muhammad Yunus and reams of research in the decades that followed the launch of Grameen Bank in 1976.

Much of the research on microfinance focuses on factors associated with the efficient delivery of loans and their effect on borrowers -- in other words, on the financial and economic aspects of the microfinance movement.

But by ignoring microfinance's cultural aspects -- including the influence of patriarchal attitudes on lending practices -- the ability to make loans to the women whom microfinance was originally intended to serve can be seriously restricted, says Wharton management professor Tyler Wry.

Using data on more than 1,800 microfinance institutions (MFIs) in 168 countries compiled by the Microfinance Information Exchange, Wry and Eric Yanfei Zhao from the University of Alberta School of Business look at policies advocated by the United Nations, World Bank and other development agencies that are intended to build stable infrastructures for microfinance institutions.

"We found that countries that do have more liberalised markets, including increased flow of capital and thus the ability to make more loans, also [can] support a lot more microfinance activity, which is good," Wry says.

"But we also found that these same factors that would make a country attractive to MFIs also made it less likely that they would lend to women."

He and Zhao present preliminary findings in a working paper titled, "Culture, Economics, and Cross-National Variation in the Founding and Social Outreach of Microfinance Organizations."

Read the full article here

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