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Finance for the poor: from microcredit to microfinancial services

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  • Imran Matin

    (Research and Evaluation Department, Bangladesh Rural Advancement Committee (BRAC), Dhaka, Bangladesh)

  • David Hulme

    (Institute for Development Policy and Management, University of Manchester, UK)

  • Stuart Rutherford

    (Institute for Development Policy and Management, University of Manchester, UK, and Managing Director of SafeSave, Dhaka, Bangladesh)

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    Abstract

    This paper reviews the achievements of the 'microfinance revolution', through reference to the now extensive literature. It finds that there are many opportunities to improve and innovate. To illustrate this finding, the paper concentrates on examining what we need to know to design and deliver better financial products to the poor, especially the poorest. It argues that financial services for the poor are essentially a matter of helping the poor turn their savings into sums large enough to satisfy a wide range of business, consumption, personal, social and asset-building needs. The range of such 'swaps' should be wide enough to cater for short, medium and long-term needs, and they must be delivered in ways which are convenient, appropriate, safe and affordable. Providing poor people with effective financial services helps them deal with vulnerability and can thereby help reduce poverty. However, the relationship is driven by complex livelihood imperatives and is not simple. Microfinance is not a magic sky-hook that reaches down to pluck the poor out of poverty. It can, however, be a strategically vital platform that the poor can use to raise their own prospects for an escape from poverty. Copyright © 2002 John Wiley & Sons, Ltd.

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    Bibliographic Info

    Article provided by John Wiley & Sons, Ltd. in its journal Journal of International Development.

    Volume (Year): 14 (2002)
    Issue (Month): 2 ()
    Pages: 273-294

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    Handle: RePEc:wly:jintdv:v:14:y:2002:i:2:p:273-294

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    Web page: http://www3.interscience.wiley.com/journal/5102/home

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    1. Hoff, Karla & Stiglitz, Joseph E, 1990. "Imperfect Information and Rural Credit Markets--Puzzles and Policy Perspectives," World Bank Economic Review, World Bank Group, vol. 4(3), pages 235-50, September.
    2. Stiglitz, Joseph E, 1990. "Peer Monitoring and Credit Markets," World Bank Economic Review, World Bank Group, vol. 4(3), pages 351-66, September.
    3. Morduch, Jonathan, 2000. "The Microfinance Schism," World Development, Elsevier, vol. 28(4), pages 617-629, April.
    4. Mosley, Paul & Hulme, David, 1998. "Microenterprise finance: Is there a conflict between growth and poverty alleviation?," World Development, Elsevier, vol. 26(5), pages 783-790, May.
    5. Jonathan Morduch, 1998. "Does Microfinance Really Help the Poor? New Evidence from Flagship Programs in Bangladesh," Working Papers 198, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
    6. Lipton, Michael, 1976. "Agricultural finance and rural credit in poor countries," World Development, Elsevier, vol. 4(7), pages 543-553, July.
    7. Zeller, Manfred & Schrieder, Gertrud & von Braun, Joachim & Heidhues, Franz, 1997. "Rural finance for food security for the poor," Food policy reviews 4, International Food Policy Research Institute (IFPRI).
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    Cited by:
    1. Togba, Edith Leadaut, 2012. "Microfinance and households access to credit: Evidence from Côte d’Ivoire," Structural Change and Economic Dynamics, Elsevier, vol. 23(4), pages 473-486.
    2. Bradstock, Alastair, 2005. "Changing livelihoods and land reform: Evidence from the Northern Cape province of South Africa," World Development, Elsevier, vol. 33(11), pages 1979-1992, November.
    3. Asad K. Ghalib, 2011. "Estimating the depth of microfinance programme outreach: empirical findings from rural Pakistan," Brooks World Poverty Institute Working Paper Series 15411, BWPI, The University of Manchester.
    4. Rebecca L. Thornton & Laurel E. Hatt & Erica M. Field & Mursaleena Islam & Freddy Solís Diaz & Martha Azucena González, 2010. "Social security health insurance for the informal sector in Nicaragua: a randomized evaluation," Health Economics, John Wiley & Sons, Ltd., vol. 19(S1), pages 181-206, September.
    5. Hilson, Gavin & Ackah-Baidoo, Abigail, 2011. "Can Microcredit Services Alleviate Hardship in African Small-scale Mining Communities?," World Development, Elsevier, vol. 39(7), pages 1191-1203, July.
    6. Alex Winter-Nelson & Anna A. Temu, 2005. "Liquidity constraints, access to credit and pro-poor growth in rural Tanzania," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(7), pages 867-882.
    7. Thapa, Ganesh, 1. "Sustainability and Governance of Microfinance Institutions: Recent Experiences and Some Lessons for Southeast Asia," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 3(1).
    8. Paul, Sohini, 2013. "The Credit-worthiness of a borrower and the selection process in Micro-finance: A case study from the urban slums of India," MPRA Paper 48116, University Library of Munich, Germany.
    9. O. Emre Ergungor, 2006. "Bank branch presence and access to credit in low-to-moderate income neighborhoods," Working Paper 0616, Federal Reserve Bank of Cleveland.
    10. Janda, Karel & Zetek, Pavel, 2014. "Survey of Microfinance Controversies and Challenges," MPRA Paper 56657, University Library of Munich, Germany.
    11. Janda, Karel & Zetek, Pavel, 2014. "Mikrofinanční Revoluce: Aktuální Kontroverze A Výzvy
      [Microfinance Revolution: Recent Controversies And Challenges]
      ," MPRA Paper 54098, University Library of Munich, Germany.
    12. Paxton, Julia & Young, Lauren, 2011. "Liquidity Profiles of Poor Mexican Households," World Development, Elsevier, vol. 39(4), pages 600-610, April.
    13. Gunhild Berg, 2010. "Evaluating The Impacts Of Microsaving: The Case Of Sewa Bank In India," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 35(1), pages 75-96, March.
    14. Mersland, Roy, 2005. "Microcredit for self-employed disabled persons in developing countries," MPRA Paper 2068, University Library of Munich, Germany.
    15. Gareth A. Jones & Anthea Dallimore, 2009. "Wither participatory banking?: experiences with village banks in South Africa," LSE Research Online Documents on Economics 23354, London School of Economics and Political Science, LSE Library.

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