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Microfinance as a Poverty Reduction Tool—A Critical Assessment

Author

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  • Anis Chowdhury

Abstract

This paper attempts to provide a critical appraisal of the debate on the effectiveness of microfinance as a universal poverty reduction tool. It argues that while microfinance has developed some innovative management and business strategies, its impact on poverty reduction remains in doubt. Microfinance, however, certainly plays an important role in providing safety-net and consumption smoothening. The borrowers of microfinance possibly also benefit from learning-by-doing and from self-esteem. However, for any significant dent on poverty, the focus of public policy should be on growth-oriented and equity-enhancing programs, such as broad-based productive employment creation.

Suggested Citation

  • Anis Chowdhury, 2009. "Microfinance as a Poverty Reduction Tool—A Critical Assessment," Working Papers 89, United Nations, Department of Economics and Social Affairs.
  • Handle: RePEc:une:wpaper:89
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    File URL: http://www.un.org/esa/desa/papers/2009/wp89_2009.pdf
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    References listed on IDEAS

    as
    1. Karlan, Dean S. & Zinman, Jonathan, 2009. "Expanding Microenterprise Credit Access: Using Randomized Supply Decisions to Estimate the Impacts in Manila," CEPR Discussion Papers 7396, C.E.P.R. Discussion Papers.
    2. Morduch, Jonathan, 2000. "The Microfinance Schism," World Development, Elsevier, vol. 28(4), pages 617-629, April.
    3. Shahidur R. Khandker, 2005. "Microfinance and Poverty: Evidence Using Panel Data from Bangladesh," World Bank Economic Review, World Bank Group, vol. 19(2), pages 263-286.
    4. Rahman, Aminur, 1999. "Micro-credit initiatives for equitable and sustainable development: Who pays?," World Development, Elsevier, vol. 27(1), pages 67-82, January.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Winkler, Adalbert & Wagner, Charlotte, 2013. "Growth patterns of microfinance clients - Evidence from Sub-Saharan Africa," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79945, Verein für Socialpolitik / German Economic Association.
    2. Kent, Derin & Dacin, M. Tina, 2013. "Bankers at the gate: Microfinance and the high cost of borrowed logics," Journal of Business Venturing, Elsevier, vol. 28(6), pages 759-773.
    3. Tilman Altenburg & Wilfried Lütkenhorst, 2015. "Industrial Policy in Developing Countries," Books, Edward Elgar Publishing, number 14726.
    4. Son, Vien Nguyen & Schinckus, Christophe & Chong, Felicia, 2017. "A post-Marxist approach in development finance: PMF or production mutualisation fund model applied to agriculture," Research in International Business and Finance, Elsevier, vol. 40(C), pages 94-104.
    5. repec:eee:quaeco:v:64:y:2017:i:c:p:44-56 is not listed on IDEAS
    6. repec:wsi:jdexxx:v:18:y:2013:i:01:n:s1084946713500064 is not listed on IDEAS

    More about this item

    Keywords

    microfinance; poverty; employment; growth;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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