Has microfinance lost its moral compass?

Tuesday, September 2, 2014

The industry that provides financial services for people on low-incomes and without access to traditional banking services is morally reprehensible according to new research from The University of Manchester.

Microfinance is the term for typically targeted at the poor who do not have access to mainstream and relates to the supply of small loans ($25-$500) and sometimes savings.

The research published today, by the Brooks World Poverty Institute based in The University of Manchester, principally questions whether has lost its moral compass by failing the very people it is meant to support.

Much of the data was collected by the PhD researcher Mathilde Maitrot, who has been working in Bangladesh. She said: “Microfinance is frequently cited as a great success for people living in poverty but our research has shown that this is not always the case and often the opposite is true. The reality is that people living in poverty in countries like Bangladesh actually have very little control over their loans.”

Source: Phys.org (link opens in a new window)

Base of the Pyramid, financial inclusion, microfinance