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Microcredit in Prefamine Ireland

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  • Hollis, Aidan
  • Sweetman, Arthur

Abstract

Hundreds of independent, local, quasi-charitable microcredit societies, or "loan funds," were lending to as many as 20% of Irish households in the mid-nineteenth century. Monitored by a central regulatory authority, funds in the system were successful in mitigating informational, moral hazard and enforcement problems, and thus operated at a surplus in a market where intermediation by the banks seems not to have been possible. Created under special legislation, their goal was to relieve poverty by providing credit to the "industrious poor" on a large scale, at competitive interest rates, without public funding. Evidence from the loan funds offers new insights into capital formation in the Irish economy of the nineteenth century and suggests that traditional notions regarding the economic activities of the Irish poor may need to be rethought; it is also relevant for development economists studying current microcredit initiatives.
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Suggested Citation

  • Hollis, Aidan & Sweetman, Arthur, 1998. "Microcredit in Prefamine Ireland," Explorations in Economic History, Elsevier, vol. 35(4), pages 347-380, October.
  • Handle: RePEc:eee:exehis:v:35:y:1998:i:4:p:347-380
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    References listed on IDEAS

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    1. Aidan Hollis & Arthur Sweetman, 1997. "Complementarity, Competition and Institutional Development: The Irish Loan Funds through Three Centuries," Economic History 9704003, EconWPA.
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    8. Hollis, Aidan & Sweetman, Arthur, 1998. "Microcredit: What can we learn from the past?," World Development, Elsevier, vol. 26(10), pages 1875-1891, October.
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    12. Besley, Timothy, 1995. "Savings, credit and insurance," Handbook of Development Economics,in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 36, pages 2123-2207 Elsevier.
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    Cited by:

    1. Hollis, Aidan & Sweetman, Arthur, 2004. "Microfinance and Famine: The Irish Loan Funds during the Great Famine," World Development, Elsevier, vol. 32(9), pages 1509-1523, September.
    2. Goodspeed, Tyler Beck, 2016. "Microcredit and adjustment to environmental shock: Evidence from the Great Famine in Ireland," Journal of Development Economics, Elsevier, vol. 121(C), pages 258-277.
    3. Barrett, Alan & Kearney, Ide & McCarthy, Yvonne, 2006. "Quarterly Economic Commentary, Winter 2006," Forecasting Report, Economic and Social Research Institute (ESRI), number QEC20064, April.
    4. Gutiérrez-Nieto, Begoña & Serrano-Cinca, Carlos & Mar Molinero, Cecilio, 2007. "Microfinance institutions and efficiency," Omega, Elsevier, vol. 35(2), pages 131-142, April.
    5. Edward Simpson Prescott, 1997. "Group lending and financial intermediation: an example," Economic Quarterly, Federal Reserve Bank of Richmond, issue Fall, pages 23-48.
    6. Marc Prat Sabartes, 2008. "Cotton manufacturers as bankers: the textile trade and credit in spain (1840-1913)," Working Papers in Economics 189, Universitat de Barcelona. Espai de Recerca en Economia.
    7. Zahir Dossa & Katrin Kaeufer, 2014. "Understanding Sustainability Innovations Through Positive Ethical Networks," Journal of Business Ethics, Springer, vol. 119(4), pages 543-559, February.
    8. Hollis, Aidan & Sweetman, Arthur, 2001. "The life-cycle of a microfinance institution: the Irish loan funds," Journal of Economic Behavior & Organization, Elsevier, vol. 46(3), pages 291-311, November.
    9. Hollis, Aidan & Sweetman, Arthur, 1998. "Microcredit: What can we learn from the past?," World Development, Elsevier, vol. 26(10), pages 1875-1891, October.
    10. Goodspeed, Tyler, 2013. "Famine, Finance, and Adjustment to Environmental Shock: Microcredit and the Great Famine in Ireland," MPRA Paper 50324, University Library of Munich, Germany.
    11. Aidan Hollis & Arthur Sweetman, 1997. "Complementarity, Competition and Institutional Development: The Irish Loan Funds through Three Centuries," Economic History 9704003, EconWPA.
    12. James C. Brau & Gary M. Woller, 2004. "Microfinance: A Comprehensive Review of the Existing Literature," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 9(1), pages 1-28, Spring.

    More about this item

    JEL classification:

    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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