Bolivia during the global crisis 1998-2004: towards a 'macroeconomics of microfinance'
AbstractThe macroeconomic role of microfinance appears to have varied enormously between country cases, as notably exposed by the recent wave of macroeconomic crises. For example, in Indonesia in the late 1990s microfinance appears to have played a notably counter-cyclical role, whereas in Bolivia, the main focus of this paper, its role was in most cases to intensify rather than restrain the crisis. We find part of the explanation for this in the behaviour of government towards microfinance (much more conciliatory towards defaulting debtors in the Bolivian case) and in the structure of demand (unfavourable, in Bolivia, to the distribution and service sector which is the main market for microenterprise). However, closer examination of the Bolivian case suggests that institutional design also played an important role. In particular, those organizations which provided savings, training and quasi-insurance services bucked the trend of rising default rates and falling lending through the crisis and did particularly well, whereas the new breed of consumer-credit microfinance organizations did particularly badly and in several cases went out of business. This experience suggests, in particular, that it may be appropriate to call into question the fashionable 'minimalist' (credit-only) model of microfinance, as certainly in Bolivia it was principally the credit-plus institutions which proved more financially disciplined and more resilient to crisis. Copyright © 2006 John Wiley & Sons, Ltd.
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Bibliographic InfoArticle provided by John Wiley & Sons, Ltd. in its journal Journal of International Development.
Volume (Year): 18 (2006)
Issue (Month): 2 ()
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- Patten, Richard H. & Rosengard, Jay k. & Johnston, Don JR., 2001. "Microfinance Success Amidst Macroeconomic Failure: The Experience of Bank Rakyat Indonesia During the East Asian Crisis," World Development, Elsevier, vol. 29(6), pages 1057-1069, June.
- P. Mosley, 2001. "Microfinance and Poverty in Bolivia," Journal of Development Studies, Taylor & Francis Journals, vol. 37(4), pages 101-132.
- International Monetary Fund, 2002.
"Microfinance Institutions and Public Policy,"
IMF Working Papers
02/159, International Monetary Fund.
- Newman, John & Jorgensen, Steen & Pradhan, Menno, 1991. "How Did Workers Benefit from Bolivia's Emergency Social Fund?," World Bank Economic Review, World Bank Group, vol. 5(2), pages 367-93, May.
- Tchakoute-Tchuigoua, Hubert, 2012. "Active risk management and loan contract terms: Evidence from rated microfinance institutions," The Quarterly Review of Economics and Finance, Elsevier, vol. 52(4), pages 427-437.
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