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Why Doesn’t Milford Bateman’s Book Work?
August 26, 2010
Milford Bateman’s new book, Why Doesn’t Microfinance Work? The Destructive Rise of Local Neoliberalism, annoys me in much the way that Dambisa Moyo’s did last year. I see myself as open-minded, but I guess I am allergic to (as I perceive it) sloppy thinking. The book makes dramatic conspiracy claims, yet is loose in its reasoning; careless in its use of evidence; and heavy in its use of passive voice and weighty abstractions such as “neoliberalism” that obscure for the reader (and perhaps the writer) who is accused of doing what. I found it hard to get through. (For a kinder (re)view, read Malcolm Harper.)
Bateman is clear about his thesis though:
The central argument…is that microfinance is largely antagonistic to sustainable economic and social development, and so also to sustainable poverty reduction. Put simply, microfinance does not work. I fully accept that there are some minor benefits to the be derived from the widespread provision of microfinance to the poor….But I argue that these benefits are very minimal indeed, and anyway wholly insignificant when set alongside the huge longer-term downsides and opportunity costs inherent in the operation of the microfinance model. To focus upon these few minor shorter-term benefits is to deliberately focus on the few trees left standing after having helped the entire forest to burn down. (pp.1–2, emphasis in original)
Bateman is right to challenge the mythology that was constructed around microfinance in order to sell it to donors. But he commits the error of his opponents in advocating extremism too, just of the opposite tenor. It seems as if his passion about the problems of microfinance, fired by personal experience in Eastern Europe, along with his verbal fluency and a proclivity to view public affairs as polarized ideological battles, override his propensity for critical thinking. The result is a story in which the monolithic “international donor community” chooses to “neoliberalize” microfinance worldwide out of blind ideology, or, worse, a “political” drive to make the world safe for corporations. Bateman is not saying that microcredit directly hurts clients on average but rather that those who push microfinance are powerful enough that they could instead push developing nations onto quite different paths, in particular deploying state-led credit models that he says can be relied upon to deliver development. If it were weren’t a captive of neoliberalism, the international donor community could make India and Pakistan, finance-wise, more like China and Vietnam.
Seems a strong claim to me.
On page after page, I found factual misinterpretations and vague, dubious generalizations. Rather than enter a full-on debate with the argument, let me show you examples of how Bateman’s passion seems to lead him to select and distort evidence. I find it hard to fully engage with a piece of analysis in which the conclusions so seem to drive the evidence. Think of the right column of this table as my marginalia:
| Bateman | Me |
| Muhammad Yunus stumbled on the idea of microcredit on learning that 42 people in the village near his university were locked into debts worth only $42 total. “He decided to cancel this debt out of his own pocket, and was embarrassed to be almost royally feted for such a small sum.” (p. 9) | Yunus did not cancel the debt, but substituted his lenient, no-interest loans for the moneylenders’. And the cited pages of Yunus’s autobiography mention no such hero worship. |
| “By the late 1980s, microcredit and microenterprise development had become the international development community’s anti-poverty intervention of choice.” (p. 11) | According to a quick tally from the CRS database, the top category for foreign aid commitments worldwide in 1985–89 was agriculture, at $25 billion. Banking and finance was 14th, at $3 billion. |
| “As leading microfinance advocate Jonathan Morduch admitted…” (p. 13) | Jonathan is an academic who broke into the microfinance field by showing that the Grameen Bank took more subsidies than most people realized, then challenging the Pitt and Khandker study claiming that the Bank was reducing poverty. Seemingly, it takes a black-and-white world view to shoehorn him into the “advocate” category. |
| Bateman argues that while Yunus and other microfinance pioneers initially embraced outside subsidies if necessary to keep interest rates down for the poor, “the international development community soon began to disabuse the microfinance industry of this notion….The rejection of subsidies was essentially rooted in changing politics: specifically, the rapid ascendance of the neoliberal political project….Great efforts were made to commission as much supporting evidence as possible in favour of the chosen trajectory. Famously stepping up to the plate here was a group of mainly agricultural economists based at Ohio State University in the USA, who very conveniently provided a stream of arguments discrediting the notion of subsidies in rural finance and state involvement.” (pp. 13–14). | Bateman very conveniently skips over the arguments and evidence assembled by the Ohio School, above all about how billions of dollars of government-directed, subsidized credit meant for poor farmers in Brazil, Indonesia, and other nations had been captured by rural elites. Meanwhile, the Grameen Bank was not forced into a neoliberal, subsidy-free form. As Bateman notes, Yunus’s views on the proper role of government are similar to those of Milton and Rose Friedman, and presumably long have been. Grameen weaned itself off outside aid less because of ideology than because it prized its independence from donors it sometimes saw as meddlesome. And most of those donors—Norway, Sweden, the Netherlands, Japan, the United Nations—were never that enamored of neoliberalism. |
| On my work with Jonathan Morduch, Bateman writes, “Regarding the headline-grabbing results in the earlier Pitt and Khandker study…Roodman and Morduch obtained the opposite signs–that is, their results suggested negative impact.” (p. 63, emphasis in original) | Actually, we wrote: “But we do not conclude that microcredit harms; rather…reverse or omitted-variable causation is driving the results.” |
| “Supporters of the [commercial] microfinance model, centrally including both CGAP and ACCION, initially cheered the Compartamos IPO to the rooftops.” (p. 22) | Actually, CGAP said that the IPO “provoked discussion and concern within the microfinance community and elsewhere. We think some of this concern is justified and some is not.” |
Bateman twists the term “impact evaluation” when he accuses almost all evaluators of measuring the financial state and client rolls of microcreditors rather than evaluating the impact on clients. (p. 63)
He compares microcredit to the abandoned Morgenthau Plan to deindustrialize Germany after World War II (pp. 93–101). He says that historically, profit-seeking commercial banks began moving into microcredit “and so out of traditional SME [small and medium-sized enterprise] lending,” (p. 17) which lending he views, with some reason, as important for poverty-reducing economic growth. In fact, he accuses the leading Cambodian microfinance institution ACLEDA of drawing conventional Cambodian banks into microfinance and away from lending to bigger businesses and thus “playing an important role in undermining the country’s desperate attempts to escape extreme industrial and agricultural backwardness.” (p. 102, emphasis in original) Such claims beg the question of why profit-seeking banks would abandon a profitable line of business—or whether SME lending is in fact unprofitable, and why. In fact, the microcredit movement arose in part because of repeated failures to lend effectively to SMEs. Some combination of lack of credit-worthy customers and adverse business conditions makes it hard in many places. Since this was true before microcredit, it should not be blamed on microcredit.
I could go on.
There has been a lot of great research, writing, and blogging on microfinance in the last 18 months. I have in mind not my own work, but all that I have praised from this blog. If you want a realistic sense of what microfinance can achieve, I don’t think you need to read this book.
20 Comments on “Why Doesn’t Milford Bateman’s Book Work?”
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August 27th, 2010 at 4:24 am
David — you’ve just articulated the thoughts swirling through my head for the past few months. Reading Bateman’s book (I got through about half), it’s hard for me not to acknowledge that there is an important question there — could microfinance (more specifically, microcredit) have a negative impact? Especially on a macro level? It’s not much asked, yet I think it’s worth asking.
That said, it’s hard to concentrate on this question when constantly running across statements that on their face are misunderstandings at best and misrepresentations at worst. In some ways Bateman plays an important role as the industry’s devil’s advocate. Unfortunately, his methods undermine the quality of his own advocacy.
In anticipation of Milford’s response — can I point to specific cases of misrepresentation (besides Kiva, that is)? The answer is, yes, absolutely, if I had the time… Thankfully, David has just taken care of that unpleasant task.
Thanks David.
August 27th, 2010 at 6:42 am
Hi David
I am really surprised and sorry to have to say that your review of my book is a nothing more than an intemperate and ill-researched piece of nonsense. Sadly, as is very much the current fashion in the world of microfinance (see the work of Daniel Rozas for example), I suspect your review is designed with a view to solidifying your street cred and career advancement prospects within the microfinance industry, rather more than it was meant to illuminate and advance the important debate surrounding microfinance as development policy. I say ‘surprising’, because I earlier had you down as someone who was honest and open and who was willing to produce some constructively critical stuff, thanks to your willingness to peer just a little behind the obfuscation and huge hype produced by the microfinance industry. But, sadly, your usual high standards are abandoned here in order to be seen by everyone watching to be kicking some serious butt. But the problem is, David, while there are some obvious faults and omissions in my book, you don’t pick up on them: instead, it is stunning to me that you are actually quite wrong on virtually everything you pick out from my work, and where you are not factually wrong you are decidedly confused in what you say.
Regarding your marginalia:
1. Your use of the word ‘stumbled’ is meant to convey the impression that I said Yunus was accidentally drawn to microfinance. I did not say that at all. I make it quite clear that he started carefully experimenting after this first incident that he recounts in his book. This is all quite uncontroversial and merely meant to be a neutral description of what happened – this chapter was never meant as the start of the critique (it starts chapter 3). The Yunus quote was actually meant in a positive light, as I understand he was not expecting to receive the support (not ‘hero worship’ – your stupidly emotive words, not mine) he got from the community for such a simple act. You have me at an advantage here since my copy of the Yunus book is back home in Croatia (and I also suspect we might be reading different versions), but I also seem to remember in the version of the book I saw that he DID forgive the loans by paying them out of his own pocket. I simply can’t remember that he actually took on these early loans right away that minute as a credit experiment. A minor difference even if you are correct, but I suspect from what it is to come below – as often happens of course – you need to pick over these minor points because you don’t have anything to rebut the larger argument.
2. You quote various figures for international donor policies, but, as you must surely know, these are not policies specifically or directly designed to be anti-poverty measures. Instead, microfinance books are full of statements to the effect that microfinance has attained the stats of being the main anti-poverty policy. Microfinance institutions and advocates increasingly claim this has been a central part of the so-called ‘success’ of microfinance, that it is the major policy that everyone turns to if they have a poverty problem. I thought this was uncontroversial. I even quote in the book the ILO’s head of Social Finance, Bernd Balkenhol, to this regard, when he says that microfinance is ‘THE strategy for poverty reduction par excellence’ (underlining in the original). OK, yes, many of these statements are hype: but still, very senior and very serious people in microfinance are claiming that it is now the most important anti-poverty intervention of all time.
3. You completely surprising me on this silly shoehorn claim! I have always understood Professor Morduch to be one of the most balanced advocates of microfinance, but an advocate/supporter of microfinance nonetheless. A quick glance at his CV reveals:
So if Professor Morduch is NOT a dedicated advocate for and supporter of microfinance, I am a loss as to what the hell he has been doing with himself all this time!
4. Oh dear, you have not read the footnotes relating to the Ohio School, where I make plain my contention (as Hulme and Mosely also alluded to earlier in their 1996 book) that much of what the Ohio School wrote was ideologically driven. And your comment that Yunus wasn’t pushed because of the ideology to reform Grameen Bank into a for-profit commercial institution, but because he wanted to be ‘independent’, is a 1st year political theory type gaff. High-profile individuals generally do not like to see themselves as being buffeted by ideological requirements, but want to be seen as are independent, strong, self-managed…..nonetheless, they either go with the (ideological) flow or else get swept aside. History shows this repeatedly. We can leave it up to the individual, such as Yunus, to explain to others why they gave in to the ‘winds of change’, but to claim that Yunus was unaffected by the huge ideological change in the environment taking place from 1980s onwards is simply wrong. My understanding from talking to people in the region and from reading the literature (including much of Stuart Rutherford’s excellent stuff), is he had to go with the flow in return for remaining a major figurehead in microfinance, rather than just an Ahmed Hameen Khan-type footnote in history supporting an unpopular subsidised MFI model. And, David, I think you are also aware, as I am, that Yunus was – how can I say it? – ‘less than forthcoming’ (some would say fraudulent) about the amount and use of donor cash he was offered in the 1990s, and that he was perfectly willing to accept and manipulate huge grants from foreign governments in order to keep the Grameen Bank propped up. (Sorry, I can’t be more clear here for others reading this blog: but you know what I am referring to David). So its a little confusing to hear that Yunus so hated the state, why then continue to take all these juicy grants from foreign states, and to misuse them into the bargain!
5. I used the word ‘suggest’ rather than, say, the word ‘confirm’ because although you and Jonathan Morduch did come up with a ‘reasonable’ explanation for what was happening – perish the thought that microfinance might have a negative impact! – there remains the fact that the results do ‘suggest’ that positive impact is certainly not as clear cut as it was once thought. You have your explanation for what you found, but you must allow others to have different explanations.
6. Sorry, David wrong again – your comments on CGAP and ACCION are plain nonsense. There is a ton of stuff produced by CGAP and ACCION praising the IPO prior to and just a little into the IPO process. The IPO and related commercialisation issues are what these organisations are all about for goodness sake! But when they saw the huge media reaction they began to furiously row backwards. In fact, you already quoted in one of your blogs something from Richard Rosenberg to back up your claim that CGAP were ‘always critical’ of the IPO and you produced a couple sentences by Richard Rosenberg to demonstrate this. I had to respond on your blog right away to your mistake, since the sentence you quoted (which I also actually quoted in full in my book!!) is actually made well AFTER the IPO, when the damage being caused to the microfinance concept was becoming obvious to everyone and his dog. The sentence you quoted is actually very strong evidence that CGAP were hastily changing their storyline in the face of a mounting PR disaster.
7. The ‘impact evaluation’ issue – I stick by my contention that most evaluations were designed to evaluate sustainability and the immediate impact on clients, not the wider community. I notice that the major evaluation of Compartamos being completed right now by Dean Karlan and associates was done at the village/community level, as I have always advocated is the only proper level, and not simply looking at client impacts as was previously the standard technique. This was a radical move by Karlan and his team. I’m not sure why or how this important change came about, but nonetheless it is a good development and it will lead to more honest impact results. But the fact remains that the majority of evaluations undertaken prior to this one were not done like this! SO I was quite right to claim that evaluations in the past were wrong and fraudulent, and self-interestedly designed to claim impact. Moreover, before you say it, impact evaluations were wrong for lots of reasons I adumbrate in the book, but NOT because they were not of the faddish RCT methodology you promote, but simply because they evaluate impact on clients and not what should be the real subject—the overall impact on the community over the longer term.
8. In the next paragraph you belie your lack of understanding of real world economics and your devotion to theoretical mathematically modeled market processes confined to textbook worlds. You question ‘why profit-seeking banks would abandon a profitable line of business.’ There is really quite stunning Dambisa Moyo-esque naivety here—do you not entertain the possibility that perhaps the commercial banks and other institutions have found some even MORE profitable (or less risky) business opportunity somewhere else? You also say that ‘In fact, the microcredit movement arose in part because of repeated failures to lend effectively to SMEs’. Wrong again David. You should not have used the word ‘effectively’, but the word ‘profitably’. Let me just quote one economist with a little bit more of an understanding of what is going on here. Howard Stein (2009) has worked for many years in Africa, and he shows that Africa’s commercial banks when sold to the major western banking chains, actually led on to a marked decline in both the quantity and quality of the financial services made available to the SME sector. The reason for this in NOT the unprofitability of SME lending per se—it was still a profitable activity—but, as Stein explains, because:
In other words, banks have got more profitable fish to fry than SME lending, so shift into those most profitable/less risky areas by choice (ie, microfinance, government bonds) and even though this is very bad for society as a whole. For further evidence on this, just look to the Inter-American Development Banks latest flagship report in 2010—‘The Age of Productivity’. The IADB brilliantly shows that Latin America has hugely suffered from the profit-driven diversion of finance into microenterprises and self-employment and so way from SMEs. In fact, Latin America’s poverty is largely put down to this dynamic! So, all told, your effort to misrepresent me on this point fails badly because you seem to be quite unaware of real life economics.
I hope your next review is more accurate and truthful, and less designed to curry favour with those in the microfinance industry whom you count as your professional circle and travel companions. I very much look forward to reading your own book that is coming out soon! After reading the points you made in the review of my own book, however, it was perhaps wise of you to go down the open book blog route–it is good that a lot of generous people will have been able to correct your obvious misunderstandings and ideological prejudices relating to microfinance before the book went to print, rather than after.
Cheers!
Milford
August 27th, 2010 at 7:28 am
I did not see Danijel’s contractually obligated blog posting before I submitted my post. But I must have felt it coming over the ether somehow….!
Milford
August 27th, 2010 at 8:10 am
Milford,
I’ll let others draw their own conclusions about my motives. Replies:
1. In using “stumbled” I did not mean to ascribe the word to you or criticize Yunus, so it is a distraction. I see the famous story of $42 as one of chance favoring the prepared mind. So I will note only that nothing you wrote here provides evidence to contradict my marginalia.
2. Senior people in microfinance making unwarranted claims about its effectiveness falls far short of “microcredit and microenterprise development had become the international development community’s anti-poverty intervention of choice.”
3. Yes, Jonathan is a long-time advisor in microfinance and thinks it’s generally a good thing. But to cast him as an “advocate” who “admits” to a problem in the field is to caricature him as someone who only acknowledges its limitations when forced to, which is inaccurate. It seems to force someone with nuanced views into a polarized worldview.
4. A footnote claiming to prove that the Ohio School was ideologically driven is not equivalent to engaging with the School’s important evidence and arguments. No one has a monopoly on the truth. In so easily dismissing serious work from a group of serious people, taken seriously by many other people, you undermine your own credibility. As for what motivated Yunus and Grameen to stop taking outside money after a loan from Japan in 1996, you offer no evidence here.
5. You are free to interpret our results as you wish. However, I think it is not very credible when your interpretation contradicts that of the authors and the mathematics and data are so complex that they take months of work to fully understand. The specific reasons we do not interpret the negative signs as microcredit hurting people are: there is a clear and commonsense pattern in the data of the least-poor women skipping microcredit, so in the data, when microcredit goes up, poverty goes up; and Hansen overidentification tests of the instruments in two-stage least-squares regressions that are consistent under the same assumptions as the published conditional recursive mixed-process Maximum Likelihood regressions return low p values.
6. Again no evidence—in this case that CGAP “cheered the Compartamos IPO to the rooftops.”
7. Actually, the Compartamos evaluation is not a “radical” departure from the past because the SPANDANA evaluation—which is not mentioned in your book, yet is the most important one to date, being randomized and studying people as poor as $2/day—also looks at impacts at the neighborhood level. Your accusations of fraud and claims about what is going on in the minds of a whole class of people are very strong—and should be backed by very strong evidence.
8. I had to laugh at your suggestion that I belie my “lack of understanding of real world economics and [my] devotion to theoretical mathematically modeled market processes confined to textbook worlds”! I have always been skeptical of how economics uses math, which is why I have never formally studied economics! (And why almost all my quantitative work has been critical.) Anyway, it does not require being trapped in models to reasonably ask why a for-profit business would abandon a profitable line of business. And asking the question does not imply a foregone, naïve conclusion. I am quite open to your argument that limited availability of capital has led some banks to leave one profitable line of business for an even more profitable one. I’d need to look at the evidence myself, of course. And if capital is the limit, then commercialization, which you call the death of microfinance, would actually relieve that constraint.
Finally, in response to your jibe at Daniel Rozas just above, let me state for the record that CGD has no contract with him. This strikes me as a snide swipe at people’s motives that sidetracks the discussion from substance.
August 27th, 2010 at 8:50 am
I haven’t read Bateman’s book, although having read both review and response I’m now less inclined to. I have however read his paper Ha-Joon with Chang, which seems to contain similar ideas to the book. The most important thing I drew from the paper was that microfinance (or microcredit) has an ideological problem, a point you have failed to mention in your review. In favouring small scale enterprise the other possible development paths are neglected, and there is little evidence that the poor are more productive or become better off in a more sustained way than through other forms of activity. Walk down the street in any developing country and ask yourself if there is a significant unmet demand for more street vendors. Can countries as a whole be lifted out of poverty through this kind of movement? But then again, no development interventions are ‘ideologically neutral’, be it education, healthcare, agriculture or microfinance.
August 27th, 2010 at 9:07 am
David
1.Its not clear to me what you are getting in at here. You must have the book in front of you – did Yunus, start a credit program right away after repaying the $27 of loans or not?
2.Not just senior people, as I said, ILO people, World Bank, USAID people and others. The hype was not contained to the microfinance industry, but much wider. Which of course makes sense, since these other organisations were the ones who drove forward the microfinance agenda in the first place.
3.Yes, Professor Morduch appears to have a ‘nuanced’ view of microfinance and honestly faces up to its problems, but if I were a member of so many football supporters clubs down the years you would have to conclude that I support football.
4.The footnote contains some important references for the interested reader to look at. I was already under serious pressure to shorten the book, so my page explaining the problem with the Ohio School approach was one section that fell to the editors knife. A pity. But I repeat – Hulme and Mosely’s book questioned the Ohio School, and Changs economic history article showed that subsidies are pretty much always required if you want a successful agricultural sector. I would have loved to put in more references questioning the Ohio School approach – I certainly had them! – but two was all I could put in. And come on David, a lot of the material coming out of the former Soviet Union was from serious professional people, but most people knew it was ideologically driven nonetheless. To assume that similar tactics were not employed by the USA in the Cold War is simply naive. Sorry, the comments on Yunus and the willful misappropriation of donor funds from foreign states, we better let lie, since perhaps you don’t know what I’m getting at. Apologies for that.
5.Your results from the 2009 paper were important be use, as I say, they were first showing that things were not as rosy as everyone had been saying for years. I accept your explanation, but at the same time the fact that you have to PROVIDE an explanation for such an awkward result is important.
6.Sorry, David, tons of evidence. If you go back to the CGAP site a couple years and many other sites, you find eager anticipation for the IPO process, and that it will be a brilliant move to incfrease the voume of microfinacne available to the poor. I am confused as to why you can’t see this because it does not seem controversial at all to me. I would have been more surprised in my research had I found CGAP criticising the IPO, but since I never did – I only found glowing support – I think you are wrong here.
7.OK, the SPANDANA one was different too, but I was actually referring to the vast bulk of evaluations before the last few years when things were clearly changing. My mistake – I should have made that more clear. But I still stick to my claim that a whole group of people willingly went along with what they knew to be quite flawed evaluations, mainly because it was good for the career or for the MFI they were employed by (they would raise more money), or it suited the ideology of the institution they worked for (CGAP, USAID, ACCION, etc). Ideologies undergo a paradigm shift too, and we often find that very many agreed on what we know later on to be a flawed approach. Look at the amount of people who bought into ‘giving food to the poor’…we later realised that deters local production, so it was an idea that was then abandoned adn we no longer hear of it. But at the time, there were many serious people claiming it was the ‘right and only way’ to help the poor.
8.No, no, sorry, you still don’t get it. Commercialisation is part of the problem here; not the solution. The most commercialised banks were those who diverted off into the sky in search of profit anywhere (sub-prime mortgages anyone?) but not into solid development projects. Commercialisation might increase the volume of funds, but this means squat if it all goes in to the wrong or the least productive uses: indeed as we see with microfinance, as the IADB confirmed just recently.
Finally, OK, sorry about the quip at the end. But I’m getting more and more pissed off with the hired hands brought in to push the microfinance model. You simply cannot have a proper discussion between people with a vested career and private interest in pushing the microfinance model to the rooftops, and who are duty bound to rubbish every attempt by those who want to air and debate material that shows it is less than good for the poor and alternatives might be better. I know, I should probably give up trying, but it still bugs me!
I look forward to receiving a copy of your microfinance book in due course and reviewing it on the ODI website.
Cheers!
Milford
August 27th, 2010 at 9:17 am
AR, thank you for raising this because I agree it is a core point in Bateman’s book. I would agree to a certain extent that microfinance has an ideological problem, in that there certainly are institutions and individuals who support it out of an unrealistically strong faith in private enterprise to solve the problem of poverty. But I think this gets one only so far in understanding it. I doubt , for example, that the Netherlands, Norway, Japan, IFAD (a UN agency), and Sweden have been entrapped by this ideology. Likewise for the thousands of Kiva users. So I tend to think of it as more of a *mythology* problem. What is appealing to many people about microfinance is the stories about individuals escaping poverty.
But I would offer two other responses. First, yes maybe favelas don’t need more vendors, but those vendors may well value additional ways to manage their money, including various forms of microfinance. Second, it is easy for the likes of us to say “donors should do that instead of this” but in fact there may be all sorts of practical reasons why doing things another way is very hard (if not necessarily impossible). Those reasons, and the history of donors’ past attempts to do things another way, need to be reviewed, respected, and learned from.
August 27th, 2010 at 9:28 am
Agreed, I just wanted to point out that whilst your comments in your review show some inaccuracies and sloppy logic in the book its slightly unfair not to mention an important point that is well supported by Bateman that you might to some extent agree with. The whole microcredit wave really kicked off without any evidence that using donor resources in this way was the most effective (though there is some evidence that the poor do have access to investments with high rates of returns if their credit constraint is relaxed). I agree with you that its more the mythology rather than the ideology that has caught developed countries and donors, which is why I say that it is microcredit that has an ideological problem, not the providers and advocates of it.
I think your point about vendors valuing various forms of microfinance is trying to reiterate a point you often make, that microfinance is about a lot more than credit, and it is perhaps these other services that are the most valuable. This has long been my feeling.
August 27th, 2010 at 10:52 am
1. According to his book, he lent the 27 people $42 through his assistant and asked that they pay back when they could.
2. No question there was a lot of hype. But that is not the same as “microcredit and microenterprise development had become the international development community’s anti-poverty intervention of choice.”
4. I think the Ohio School did important work and deserves to be taken seriously—and that includes doing serious critiques, which I presume are what you cite. That does not justify treating the School as if there was nothing to be learned from it; that I don’t find credible. In fact, as a style of discourse, I think it is dangerous to dismiss others’ views so quickly by brandishing labels.
6 & 7 & 8. No evidence provided here.
August 27th, 2010 at 11:34 am
When my wife accompanies me on one of my journeys (too rarely, though), she is always amazed, and after a while bored, by the enthusiasm and zeal with which my various companions of work and travel endlessly discuss rural, micro, SME, informal, commercial or development finance – not surprisingly perhaps, her own field being theory of art. I just checked with her as an impartial observer: we usually do avoid offensive terminology (not to be offensive myself, I decided not to list some of it). I should add, though, that somehow neoliberalism is not usually among our topics, unless we happen to run into Easterly.
Addressing all the issues raised in Milford’s book, plus those in this blog, would require writing another book, possibly in several volumes, or a few doctoral dissertations (maybe –tongue in cheek – by students at Ohio State). I will just pick one: whether allocations of humant and financial resources to microfinance detract from SME lending. Unfortunately I don’t have the data needed for generalizations.
Here are some data on Bank Rakyat Indonesia, well-known for the microsaving and microlending activities of its Microbanking Units, less known, after its bankruptcy in 1998, as the most profitable bank of Indonesia since 2007, partially privatized in 2003. This is not an insignificant example; after all, the savings mobilized by the BRI Microbanking Units alone (one of BRI’s business segments) approximate the total investments in 2008 by MIVs worldwide.
BRI portfolio composition and NPL ratios, 2005-2008
Business segment Loan size in US$ (2007) Non-performing loan ratio Portfolio 2008 in %
2005 2006 2007 2008
Microbanking Up to 5,000* 1.55 1.36 1.19 1.02 26.6
Small consumer Up to 20,000 1.62 1.91 1.67 1.08 19.0
Small commercial Up to 500,000 4.06 6.32 5.71 3.52 27.6
Medium >0.5-5 million 7.48 5.87 5.67 6.33 7.7
Corporate >5 million 16.93 13.55 4.62 4.53 19.1
BRI total 4.68 4.81 3.44 2.80 100.0
Total in billion US$ 7.68 9.61 12.09 14.71
*Raised to US$10,000 toward the end of 2008.
(For a better view of the table, see page 10 of the source.)
During the four-year period from 2005 to 2008 portfolio size almost doubled from $7.7 billion to $14.7 billion. In response to the crisis of 1997/98 it was decided that the bank should focus on MSME lending. As of 2008 almost half the portfolio has been in microloans up to $5,000 (27%) and salary-based consumer loans up to $20,000 (19%). These two business segments with relatively small loans have by far the best performance, with NPL ratios of 1.0% and 1.1%, respectively. Small commercial loans up to $500,000 account for 28% of the portfolio, at a considerably higher NPL ratio of 3.5%. Medium-scale loans up to $5 million account for 7.7% of the portfolio, at a yet higher NPL ratio of 6.3%. Corporate loans, kept below 20% of the portfolio as per decision of the Government as the bank’s (majority) owner have an NPL ratio of 4.5%.
(Hans Dieter Seibel with Agus Rachmadi, Growth and Resilience of Savings-based Microfinance Institutions: The Case of the Microbanking Units of Bank Rakyat Indonesia, Cologne 2009) (For a full picture with historical data, see Hans Dieter Seibel, Restructuring of State-Owned Financial Institutions: Lessons from Bank Rakyat Indonesia. Manila, Asian Development Bank (ISBN 978-971-561-797-0)., http://www.adb.org/Documents/B.....titutions/ )
From 1998 to 2008 the loan portfolio increased from US$5.25 billion to $14.71 billion. Over this period portfolio composition changed substantially, with micro and small consumer lending (with loans up to $20,000) increasing from 18.4% of the portfolio in 1998 to 45.6% in 2008, while small commercial and medium-scale loans (>$20,000 to $5 million) fell from 47.1% to 35.3%; corporate loans, the main cause of BRI’s fall during the Asian financial crisis, fell from 34.5% to 19.1% (for a full picture see Table 3 in http://www.adb.org/Documents/B.....titutions/ ).
Composition of the BRI Loan Portfolio in Percent, 1998 and 2008
Business Segment 1998 2008
Micro 11.1 26.6
Small Consumer 7.3 19.0
Small Commercial 42.9 27.6
Medium-scale 4.2 7.7
Corporate 34.5 19.1
Total in % 100.0 100.0
Total in billion US$ 5.25 14.71
So, what do we conclude? That BRI has favored microlending in terms of human and financial resource allocation, at the expense of SME lending? Percentage-wise it certainly has. But in absolute terms both its micro and its SME portfolios have experienced tremendous growth and have both contributed to the Bank’s profitability. The Microbanking Units, with a loan portfolio of $3.90 billion in 2008, had the lowest NPL ratio (1.02% at 1 day or more overdue), and their ROA, at 9.8%, was far above the Bank’s overall ROA of 4.2%. Moreover, the Microbanking Units mobilized $5.88 billion in savings, generating excess liquidity of almost $2 billion: a major source of SME finance in the bank.
I am looking forward to the conclusions David and Milford and perhaps others might draw from this; I will stay out of their way.
Hans Dieter Seibel (seibel@uni-koeln.de)
PS: I wrote this after Milford’s first comment.
I hope the tables don’t come out as warped as in the window in which I posted my comments (if so, send me an email).
August 27th, 2010 at 9:46 pm
Dear Dr Bateman, You write that Muhammad Yunus had to ‘go with the flow in return for remaining a major figurehead in microfinance’. You mention my writing as a source for this idea, but I don’t remember writing about Dr Yunus’s striking any such deal, and it doesn’t sound like the sort of thing I would say. I certainly have no knowledge of such a deal. I think there must have been a misunderstanding. Stuart.
August 28th, 2010 at 12:40 am
I think this is my favorite sentence of the year:
“and Hansen overidentification tests of the instruments in two-stage least-squares regressions that are consistent under the same assumptions as the published conditional recursive mixed-process Maximum Likelihood regressions return low p values.”
August 28th, 2010 at 5:44 am
Bateman writes- ‘My understanding from talking to people in the region and from reading the literature (including much of Stuart Rutherford’s excellent stuff), is he (Yunus) had to go with the flow in return for remaining a major figurehead in microfinance, rather than just an Ahmed Hameen Khan-type footnote in history supporting an unpopular subsidised MFI model.’
I presume the reference is to Akhter Hameed Khan’s Comilla project which failed because of local-elite capture of co-operatives (and the political instrumentalization of the same as for example in India) and the terrible conflict which led to the creation of Bangladesh. Indeed Grameen and BRAC had no choice but to lend to those too weak to default.
Clearly some sort of mathematical politics type model is needed here to capture what constitutes MF’s niche. Granted, the hype surrounding MF as a magic formula to turn poor women into dynamic entrepreneurs bore no relation to the truth. However, MF isn’t operating in a vacuum. Presumably it must impact on client-patron type social structures. If so, the relatively better off- who may be able to get non-repayable loans from Nationalized Banks or wield ‘caste-based’ market power- might well be utilizing that advantage to preserve or increase their relative standing.
If emigration- a very costly affair but demonstrably the best or lowest risk engine out of poverty- can’t be financed by MF, but only by high status money lenders, then perhaps, rather than poverty reduction- its role might be that of raising the most successful of its clients to a level where they can borrow to emigrate. More generally, poverty can’t diminish simply by allowing Entrepreneurship to become effective. There has to be a more productive use of other factors, which is not dominated by another’s comparative advantage or production subsidy, and moreover a growth path to it robust to perturbation.
The integration of a political economic theories and perspectives- perhaps also an evaluation of the psychological costs and benefits of MF- while permitting fairer evaluation, might, however, serve only to confirm those metallic laws of Rossi mentioned in a previous post.
August 29th, 2010 at 8:53 am
Dear Mr Rutherford
Yours was not the only reference to this conclusion, of course. And of course there was no ‘formal’ deal – as in written deal, for example – if that is what you think I am implying, though I cannot see how you can think that is what I am implying from what I wrote. But your work was indeed used to underline that Grameen was indeed in danger of being ‘passed over’ by those associated with new commercialised microfinance model. As I quote you from ‘Grameen II- the first five years’ (2006), ‘Internationally, Grameen fell out of fashion as industry observers, particularly in North America, shifted their attention to other forms of microfinance’ . Others confirmed that had Grameen decided to remain a subsidised MFI it would undoubtedly have affected Yunus’s status within the world of microfinance. It couldn’t have done otherwise surely. So I am at a loss as to why there might be anything contentious about saying what I said here.
Hi Dieter!
Interesting example. But is it generalisable? Are other banks like this? I was more interested in trends started thanks to microfinance. Although I missed being able to refer to it in my book, I refer once more to the Inter-American Development Bank (IADB) report ‘The Age of Productivity’. The IADB reported that financial resources in Latin America this last thirty years have increasingly been channelled into the least productive microenterprises and self-employed, and so very much away from the far more productive SMEs. They see this as the core dynamic behind the continent’s high level of poverty and under-development. A core factor is that from the 1980s onwards MFIs were able to absorb a growing percentage of savings in Latin America, and then disburse it as microloans. You would also have to add that these large MFIs then essentially cartelise up as soon as they can in order to maintain, and profit from, very high interest rates. Even worse, the main commercial funders standing behind many of these MFIs fully accept this anti-poor situation – sometimes insist on it even! – in order to maximise their own returns from selflessly (it says here on their PR release!) ‘helping the poor’. Of course, such high interest rates undermine every form of enterprise development, not help it.
Dear Vivek
Of course you are right and I got the name spelled wrong of one of the pioneers of microfinance in Bangladesh. I can only apologise! I was at work and rushing to respond to the ‘review’ of my book and finish other work-related things before the Bank holiday weekend break
Milford
September 3rd, 2010 at 12:35 pm
Dear Mr Bateman,
Your book was read with great interest. Many observations and conclusions seem correct, however, there are also things missing and some facts are just not correct.
1. General
1.1 Finance is no input
You seem to regard finance as an input (as do many of the microfin crowd), whereas it is just a tool to facilitate the exchange of goods, labour and services. Money alone does nothing for development.
Institutional microfinance is not “a new concept”, nor a “new financial sector innovation” but exists already for almost 300 years. Donors, NGO’s and Muhammad Yunus were just latecomers in noticing it! Or is that why you say “discovery” of microfinance in stead of discovery?
1.2 Why only recent history?
You seem to limit your book to recent (since 1970) history. Why did you exclude the experiences since 1720 of the Irish Loan Fund, established by Dean (and author) Jonathan Swift, the German and Italian experiences and in Asia the Indonesia experience since 1895? These institutions were not set up by donors/ngo’s! Their initiators were not neo-liberals either as far as I know!
They all did have a common factor of solidarity, but had no subsidies (not needed) and were able to make the profit to stay alive. Interest rates were not high, bank margins not high.
The Irish Loan Funds scheme had as aim “the “industrious poor” who could not obtain credit elsewhere, and to smooth consumption among the poor. (see: Complementarity, Competition and Institutional Development: The Irish Loan Funds through Three Centuries, by: Aidan Hollis and Arthur Sweetman).
In Indonesia it was aimed to keep people free of usurers and providing financial services to those who had no access to commercial banks.
What the Indonesian experience also shows, supporting your case, is that after 115 years of millions of micro-loans annually, there is still substantial poverty in the country, but poverty eradication was not its aim.
Many of today’s micro schemes and writers could benefit from reading the long history of microfinance.
1.3 Informal sector
In many parts of your book you seem to equate microfinance with the informal sector.
Strangely enough not so when it comes to some of your more favoured countries. There is no such one to one relationship in my experience. Micro loans can and are given in anyone sector, formal or informal.
1.4 Interest rates
You many times talk about very high interest rates. It is unclear to me whether these rates have been adjusted for country inflation, which varies greatly. Are your rates adjusted for that? What’s high? In the Netherlands today the high and low bank interest rates differ a factor 5.
1.5 Subsidies
You talk a lot about subsidies and market rates without exactly defining what you mean by that. A low interest rate, but still profitable for a bank, is also a market rate!
A high rate but less than inflation is leading an institution into insolvency and makes attracting local deposits impossible. Banks depending on local deposits/savings rather than donor/ngo or external bank loan funding have a better sustainability record historically.
1.6 Loan purpose and term
You seem to think (not unusual for non-bankers) that micro or small loans are given for an activity. They are not really. Such loans should be regarded as financing family business cash flows. Families e.g. in Indonesia may have 1 to 6 sources of income from several activities or businesses of family members (e.g. Ann Dunham (Obama’s mother) on the characteristics of some BRI borrowers, 1988)
Asking for a loan purpose from a potential client is just fooling yourself (but you will get the required answer!).
You also seem to think that an agricultural seasonal loan should be repaid after harvest. That may be true if that is the only family activity but normally a bank will base a repayment schedule on the family’s cash flow, which may allow for much earlier repayment. In fact, farmers should not be stimulated to sell crops immediate after harvest when prices are usually lower.
1.7 CGAP
The “Pink Book” (page 17) of 1995 was not a CGAP initiative, but was initiated by Women’s World Banking in 1994, endorsed by the 2 international working groups (neither microfinance!) listed in your Notes, in October 1995. CGAP was started in June 1995. Surely they couldn’t have made it in such a short time! (I was a PAG member of CGAP in June 1995).
1.8 moneylenders
Grameen Bank was not the first to “inspire” the moneylender argument (page 24). In 1895 Raden Wiriamaadya used the same argument when he started the first “popular help, savings and agriculture bank” in Purwokerto, Indonesia, out of which BRI resulted. (see: Leo Schmit: History of the Volkskredietwezen in Indonesia,1895-1935).
As I expected you compare only moneylenders’ lending rates with banks, not their loan numbers and costs. Your comparison is meaningless, also because you nowhere mention the profit margins of small and micro businesses, which vary greatly per sector and location.
1.9 supplier and buyer loans
The important supplier and buyer loans to micro and small businesses and to farmers are not mentioned in your book, why? Because donors do not make them directly? MFIs supported by donors may also finance suppliers and buyers.
1.10 pawnshops
What about the pawnshops? In Indonesia they make more micro-loans than BRI.
Pawnshops hardly get donor funding, I know only of one such project in Latin America.
1.11 University courses
You let universities start attention to microfinance in the early 1990s. I was lectured on it (by the last Dutch president of AVB(BRI) in the early 1960’s at Wageningen University, Netherlands.
2. Bank Rakyat Indonesia (BRI)
2.1 establishment of BRI
BRI was not established in 1972 as you state (page 11). It started as AVB (translated: General Popular Credit Bank) in 1934, as a result of the merger of about 90 popular credit banks, the first one having been established in 1895 in Purwokerto. After independence it changed name and “BRI” became the name in 1968 when president Suharto came to power.
In 1897 the first village bank (owned by villages or individuals) was established, of which there were about 14,000 in 1912 with a few million micro loans annually. The village banks were supervised and assisted by AVB/BRI. Their experiences can be found in many publications and in the monthly popular credit journal since 1913. They were profitable and used their surplus profits for village improvement (as did the Irish Loan Funds!)
2.2 savings
BRI participated in Tabanas, a Central Bank savings scheme, since 1970. In 1984 BRI added its own SIMPEDES. That savings were not encouraged (page 15) sounds strange to me: rural micro savings were much more than the high volumes of micro loans. No need for donor finance! The savings interest was a (bank) market rate. (see also Seibel above)
2.3 State subsidized credit programmes
BRI made various loan types, from micro to medium sized. It started as a rural bank, the Indonesia market being segmented by government since pre-war days (advantage: no over-crediting and refinancing of loans!).
BRI is allowed by its 1934 constitution to act as an agent for other agencies, including government. It is not allowed by the same constitution to make a loss on such agency loans. The BIMAS agricultural loan programme (1965 to 1983) was such a government agency loan programme. It was not specifically directed at the poor, any rice farmer could participate. Average loan size in the early 1970’s was about US$ 20.
BRI had a margin of 9% on the funds provided by the Central bank. This was more than required to operate at a profit (although the profit was kept secret so as not to get a higher Central Bank borrowing rate!). BRI’s own funds were at that time attracted at 15% and lent at 23 to 25% in other sectors. In the 1970-1980 period inflation was higher than BRI’s Central Bank borrowing rate (3%) but lower than the BRI lending rate in agriculture (12%). Leon Mears of Bappenas thought it not bad to “subsidize” BIMAS to get sufficient local rice production (not all HIID experts are neo liberals?)
2.4 Unit Desa
The Unit Desa (UD) scheme of BRI was not started in 1984 (page 15). I was one of the designers of the Units in 1968. The first 18 Unit Desa started operating in Yogyakarta province in October 1969.
They were not a new thing. BRI had been instructed by presidential directive to expand its rural network, then consisting of district offices plus a few Mobile Units (MU) moving around irregularly. At a lower level there were still about 300 village banks operating (thousands had not survived WW-II and the Sukarno high-inflation period).
The first 18 UD were mobile the first year and thereafter became fixed in one location. They started to make BIMAS loans (with cheap Central Bank Funds) and in 1970 also moved into small and micro businesses in other sectors with BRI’s own funds. The application form and procedures for both loan types were the same. A lot of pre-WW-II experiences were used in the design and operation of the UD’s; overall, when pre-war administrative costs in the village banks were less than 3% of loan volume why could that not be repeated in 1970?
The reconstruction of the UD in 1984 back to its original design of 1970 had nothing to do with neo-liberalism or Harvard. Government had stopped the BIMAS agency scheme and BRI needed to adjust to that. It went ahead with its own funds in the KUPEDES programme (although some “subsidized” government agency schemes remained within BRI).
BRI never “moved to commercialization” (page 16), it had been “commercial” since 1934 with limited need for high profits as a “philanthropic institution”. For BRI there was no “new wave microfinance concept”, it kept doing what it had done since its inception. Article 4 of the 1934 constitution: “the AVB shall provide its services…taking into account…. that interest and costs charged should not be higher than is necessary to pay the interest it owes, to cover its costs, to write off items …” (Fruin, 1st president AVB, 1935). The AVB was required “to make a profit to meet its social obligations”. It operated according to “the principle of self-financing.” (Fruin).
3. Closing remarks
I fully agree with you that a micro-loan does not make a poor man/woman any better automatically; also that there is a lot of replacement of employment as a result of trade loans, plus over-financing of sectors leading to ‘involution’ (Geertz). Indeed, no development.
Over-financing is also a result of too many competing (no debtor information exchanging) providers of micro-credit, resulting in low repayment rates. Donors, ngo’s and developing country governments that allow them in are largely to blame for that.
About 90% of MFIs will possibly never make it as long as the Central Banks in developing countries do not allow them to attract local savings because of their amateurism.
Donor financing and foreign bank financing destimulates the attraction of local savings.
Commercial banks will also move into microfinance when MFI’s become a commercial threat to them (see Irish Loan Fund history).
I hope these comments are of some use to you. In case you want more details and other comments, I prefer to do that via e-mail.
Klaas Kuiper
e-mail: kkuiper@caiway.nl
September 4th, 2010 at 6:22 am
Dear Mr Kuiper
Thank you for your interesting comments on my book. I am glad that you appear to have read my book and have given me the professional courtesy of actually engaging with me in a discussion of the core concepts and ideas contained therein.
I think this blog posting is getting a little long in the tooth, so I will confine my response to a couple things, then we can continue the discussion privately should you so wish. I am certainly interested in your views and experience.
1. The Irish Loan Funds – I was early on in touch with Professor Hans Dieter Seibel about my book and he very kindly sent me some of his excellent articles, and other articles, on precisely these institutions and on the much wider history of small-scale finance. As you say, there is indeed a very interesting history to small-scale finance. I actually originally had a 2 page section in the book sub-titled ‘a short history of microfinance’ but we eventually had to abandon this because the book was getting far too large adn cumbersome. But, as I say, I do take your point that they were important institutions.
2. The CGAP ‘Pink Book’ issue – I was aware of when CGAP was created and why and how it came to publish the ‘Pink Book’. This was interesting background detail, but detail nonetheless. No matter who contributed to its preparation, the ‘Pink Book’ is almost everywhere described, correctly I think, as a CGAP product. So in the editing process, once again, we had to drop any discussion of such a minor point in order not to get bogged down with historical details. For anyone interested in the precise origins of CGAP I would recommend Ananya Roy’s excellent book ‘Poverty Capital’ just out with Routledge.
3. Informal sector – microfinance is overwhelmingly associated with the informal sector and, while I accept that some of the alternative local financial institutions I adumbrate in Chapter 7 also engage(d) with the informal sector, I do think there is an important difference.
Microfinance advocates are mainly concerned to reduce the barriers to microenterprise operation, including legal, financial and bureaucratic. In many respects, I would argue, this approach ultimately boils down to a concern to ‘informalise the formal’ in the sense of doing away with ANY and ALL impediment to microenterpreneurs – liberating the ‘heroic entrepreneurs’ from all unnecessary bonds that inhibit their transformational actions. Hernando De Soto is perhaps the most recognisable advocate of this extreme position. In most of the alternative models I outline, however, the local financial system overwhelmingly engaged only, or mainly, with formal sector enterprises. In many countries, like Japan, Italy and Spain, formalisation was necessary in order to access the sophisticated financial packages designed to help them get established and expand. In China, the small enterprises supported into operation by the Urban and Rural Credit Coops were overwhelmingly local government owned, so naturally were formally registered. Pretty much the same in Taiwan.
But even in those alternative local financial models where the informal sector was and is engaged with, there is still far more of a concern to ‘formalise the informal’ and not to ‘informalise the formal’. In Venezuela and Kerala State in India, for instance, there is a genuine concerted effort to formalise and regularise microenterprises, far more than I have seen anywhere else. This is seen in the way that there is effort to bring in formal institutional links between registered microenterprises, to unionise the microenterprise sector, to establish formal links with local democratically-mandated state planning bodies, and to make microenterprises part of the real economy based on respect for important social constraints, such as minimum wage legislation (rather than to help them evade such social responsibilities). All these trajectories are designed to formalise the informal, which is why, I would argue, they are pretty much anathema to most microfinance advocates today.
4. Your nuanced descriptions of the foundation of the Indonesian financial system are very interesting indeed to me! Most of my material was gained from the many USAID financed studies of the period, including quite a few Harvard Institute for International Development (HID) papers on the theme of microfinance and how they were going to restructure BRI. Clearly, there was more to the story. Interestingly, as a result of my book, I was contacted a couple weeks ago by one of the major microfinance institutions in Indonesia and asked if I was willing to come and present my ideas at a special event they are planning. If this invitation comes to fruition, I shall certainly take the opportunity when there to dig a little more into the interesting history of microfinance in Indonesia.
5. Inflation, market interest rates by technical definition, etc, etc. Again, I have to say there are important technical issues here, but in a book of this length it was simply not possible to go into these issues. Anyway, in my opinion, these are anyway somewhat peripheral issues to the core arguments about microfinance I was making, so the space to discuss them was simply not available.
Many thanks for again for your polite comments and expression of views on my book, and I hope we can be in touch privately if you have any more queries.
Milford
September 5th, 2010 at 6:41 am
Dera Mr Bateman,
Thanks for your kind answer.
Where do I find your e-mail address so I can give you some more references and/or comments?
Klaas Kuiper
kkuiper@caiway.nl
September 13th, 2010 at 8:55 pm
Very interesting discussion that has ensued here (after a not-so-thrilling start). I’ve tried to unpack some of it in an article I just posted on governancexborders. I wonder what you might think of the analysis.
LINK: http://governancexborders.word.....#more-1105
September 14th, 2010 at 12:21 pm
Phil, thank you for your provocative post, to which I have just replied.
September 17th, 2010 at 9:30 am
Thanks for this discussion that lead me to persons – Hans Deiter Seibel and Klaas Kuiper – that they works have influenced my though how to understand microfinance both from theoretical and practical arena as I worked with BRI almost 20 years.
I read Bateman’s book a month ago and I found the book coincidentally during my library visit to Melbourne University to read my fellow Indonesian who just completed a PhD thesis on Neoliberalism and the government driven Islamic microfinance program. This research is quite interesting particularly in relation to the neolib discourse during the presidential election a year ago. The conclusion of the research, however, is in contrast the Batemen arguments. In this respect, I’ve learned for many years that microfinance is in between market and politic, those own their pros and cons.
What the book inspires me is “the need for a new beginning” which means microfinance is dynamic and there is ample room left for researchers and I wish current study about religious mainstream in microfinance would contribute to the discussion.