nep-mfd New Economics Papers
on Microfinance
Issue of 2019‒05‒27
two papers chosen by
Olivier Dagnelie
Université de Caen

  1. A long time ago in a galaxy far, far away… How microfinance evolved and how research followed By Marek Hudon; Marc Labie; Ariane Szafarz
  2. Escaping from the poverty trap with social innovation: a social microcredit programme in Hungary By Gyorgy Molnar; Attila Havas

  1. By: Marek Hudon; Marc Labie; Ariane Szafarz
    Abstract: This article is the introductory chapter of the book A Research Agenda for Financial Inclusion and Microfinance, edited by Marek Hudon, Marc Labie and Ariane Szafarz, and forthcoming in 2019 with Elgar Research Publishing. This introductive article written by the editors explains how research in microfinance and financial inclusion evolved together with field practices. It identifies the four periods in the life of the microfinance sector that match four steps in research development: genesis, childhood, adolescence, and maturity. The article discusses whether this evolution could lead to a decline. Finally, it presents the monograph, which is organized along thematic groups of chapters. The titles of the four parts of the book are: “Framing research on microfinance and financial inclusion,” “Social, environmental and financial performance,” “Targets for financial inclusion,” and “Institutional and technological design.” Each chapter is written by scholars whose expertise on financial inclusion and microfinance is recognized internationally.
    Keywords: Microfinance; Microcredit; Financial inclusion; Development; Social finance
    JEL: G21 G23 O16 G32 O19
    Date: 2019–05–17
  2. By: Gyorgy Molnar (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences); Attila Havas (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences)
    Abstract: This paper describes a Hungarian social microcredit programme, called Kiútprogram and discusses the major lessons drawn from its operation. It was launched some 10 years ago as an adaptation of the Grameen model to the Hungarian circumstances to decrease the level of prejudice and discrimination against the Roma and improve their living conditions in the most remote, deprived areas of Hungary; microlending has been understood and introduced as a device to achieve these aims –and not as a profit-seeking business activity.During the almost ten-year long learning process, from the simple adaptation of the Grameen model the Kiútprogram has arrived to the denial of the most important features of joint liability in group lending, namely the application of the devices of social collateral. Experience has also shown that a loan itself is not sufficient to assist escaping fromthe poverty trap. Without knowledge transfer and without inter-community connection building –at least in the case of discriminated minorities –the effect of the loan may even be detrimental. In a modern society not only physical, but also social and cultural capital is needed to run a successful business in the formal sector of the economy.In the Kiútprogram’s model the loan plays a crucial role in escaping from the aspiration trap, and thus helps overcome learned helplessness. Loans without any –financial or social –collateral signal that the lender trusts the client, not only in her honesty, but also in her abilities. This method of lending strongly suggests to the clients the conviction that she is able of achieving a business success. Neither financial aid, nor loan with (social) collateral is suitable to reach this effect.
    Keywords: microcredit, group lending, empowerment, poverty trap, aspiration trap, Roma minority
    JEL: G21 L31 J24 J71
    Date: 2019–04

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