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Not All Micro-Loans Were Created Equal: The Effect of Supply Chain Location on Micro-Lending

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  • Aaron Cooke

Abstract

The positive effects of micro-loans on the impoverished has become veritable gospel to economic development professionals. Pioneered by Muhammed Yunus in the 1970s, the concept of making small loans to groups of poor entrepreneurs has become a mainstream tool of development and poverty reduction agents around the globe. However, little research has been done at this time into the microeconomic mechanics of small scale finance, especially the different outcomes of the loan depending on what sector of the economy the debtor is engaged in. A simulation designed to pursue further understanding of this subject, and conducted in partnership with Opportunity International, a micro-finance NGO, and the Westmont Investment Club, reveals whether different outcomes of a micro-loan were caused by a debtor's location in the production chain.

Suggested Citation

  • Aaron Cooke, 2011. "Not All Micro-Loans Were Created Equal: The Effect of Supply Chain Location on Micro-Lending," The American Economist, Sage Publications, vol. 56(2), pages 69-73, November.
    • Handle: RePEc:sae:amerec:v:56:y:2011:i:2:p:69-73
    DOI: 10.1177/056943451105600209
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    References listed on IDEAS

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    1. Beatriz Armendáriz & Jonathan Morduch, 2010. "The Economics of Microfinance, Second Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262014106, December.
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