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Aspiration Paradox in Indian Micro-Finance: A Difficulty and an Opportunity for Debate

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  • Wendy Olsen

Abstract

This paper examines the paradox that a borrower's status aspirations may contribute to a situation in which their borrowings exceed their capacity to repay. This paradox was first described by Thorstein Veblen, and has been fleshed out by Pierre Bourdieu. Thus in the theory of consumer culture there are strands which may be of use in planning and managing micro-finance and rural banking. Field visits in southern Andhra Pradesh suggest that one example might be the use of microfinance to purchase a cow. In this paper I flesh out a theory of micro-finance users' strategic thinking. Both individual-level and social aspects of the situation are considered carefully. The epistemology and ethics of micro-finance are thus a matter of continual re-negotiation and deliberation. The policy situation is one in which micro-finance users and providers need to discuss the situation. The aspiration paradox could lead to default and suffering.

Suggested Citation

  • Wendy Olsen, 2008. "Aspiration Paradox in Indian Micro-Finance: A Difficulty and an Opportunity for Debate," Brooks World Poverty Institute Working Paper Series 4208, BWPI, The University of Manchester.
  • Handle: RePEc:bwp:bwppap:4208
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    1. Vani K. Borooah, 2005. "Caste, Inequality, and Poverty in India," Review of Development Economics, Wiley Blackwell, pages 399-414.
    2. Sumon Kumar Bhaumik & Manisha Chakrabarty, 2006. "Earnings Inequality in India: Has the Rise of Caste and Religion Based Politics in India had an Impact?," William Davidson Institute Working Papers Series 819, William Davidson Institute at the University of Michigan.
    3. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    4. Borooah, Vani & Dubey, Amaresh & Iyer, Sriya, 2007. "The Effectiveness of Jobs Reservation: Caste, Religion, and Economic Status in India," MPRA Paper 19421, University Library of Munich, Germany.
    5. S. Mahendra Dev, 2008. "India," Chapters,in: Handbook on the South Asian Economies, chapter 1 Edward Elgar Publishing.
    6. Kijima, Yoko, 2006. "Caste and Tribe Inequality: Evidence from India, 1983-1999," Economic Development and Cultural Change, University of Chicago Press, vol. 54(2), pages 369-404, January.
    7. Ira N. Gang & Kunal Sen & Myeong-Su Yun, 2008. "Poverty In Rural India: Caste And Tribe," Review of Income and Wealth, International Association for Research in Income and Wealth, pages 50-70.
    8. Datt, Gaurav & Ravallion, Martin, 1998. "Why Have Some Indian States Done Better Than Others at Reducing Rural Poverty?," Economica, London School of Economics and Political Science, vol. 65(257), pages 17-38, February.
    9. Ronald L. Oaxaca & Michael R. Ransom, 1999. "Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, pages 154-157.
    10. Dubey, Amaresh & Gangopadhyay, Shubhashis & Wadhwa, Wilima, 2001. "Occupational Structure and Incidence of Poverty in Indian Towns of Different Sizes," Review of Development Economics, Wiley Blackwell, pages 49-59.
    11. Richard Palmer-Jones & Kunal Sen, 2003. "What has luck got to do with it? A regional analysis of poverty and agricultural growth in rural India," Journal of Development Studies, Taylor & Francis Journals, pages 1-31.
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    Cited by:

    1. Anurag Priyadarshee & Asad K. Ghalib, 2011. "The Andhra Pradesh microfinance crisis in India: manifestation, causal analysis, and regulatory response," Brooks World Poverty Institute Working Paper Series 15711, BWPI, The University of Manchester.
    2. Khan Eijaz Ahmed & Quaddus Mohammed, 2015. "Development and Validation of a Scale for Measuring Sustainability Factors of Informal Microenterprises – A Qualitative and Quantitative Approach," Entrepreneurship Research Journal, De Gruyter, pages 347-372.

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