Microfinance: A Reader

Microfinance: A Reader

Microfinance: A Reader

Microfinance: A Reader


Microfinance has become an important component of development, poverty reduction and economic regeneration strategy around the world. By the early twenty first century tens of millions of people in more than 100 countries were accessing services from formal and semi-formal microfinance institutions (MFIs). Much of the initial attention on microcredit came through work on Bangladesh's much-lauded Grameen Bank but, there are now many different 'models' for microfinance and many countries have substantial microfinance sectors.

This timely book, written by one of the major players in the UK in development economics explores, amongst others, topics such as:

  • microfinance and poverty reduction
  • microfinance, gender and social development
  • microinsurance
  • regulating and supervising microfinance institutions.

Topical and insightful, this important text examines what has become a vast global industry employing hundreds of thousands of people and attracting the attention of large numbers of governments, banks, aid agencies, non-governmental organizations and consultancy firms.


The origins of this collection lie in the demands from our students at the Institute for Development Policy and Management (IDPM) at the University of Manchester for a textbook on microfinance. We struggled to find the time to write such a book, and we doubted our intellectual ability to achieve such an ambitious goal, so we settled on editing a set of readings. In this book we try to help students who are relatively new to microfinance, and practitioners looking for an entry point into the vast academic literature, to become acquainted with the main ideas and debates about microfinance. The book is the outcome of screening more than 400 published books and papers on this topic.

In the text that follows we have sought to introduce the student and/or practitioner to some of the best known writers on microfinance, to the ideas that have shaped the growth of today’s ‘microfinance industry’ and to provide some coverage of the major regions of the developing world. Inevitably we have had to leave out many papers that have been seminal to our own understanding of the theory and practice of microfinance. There are many authors, papers, issues, institutions and country case studies that we have been pained to omit.

The papers have been selected so as to be accessible to undergraduate and graduate students in the social sciences and to the practitioners of micro finance who come from very varied backgrounds. We have not included the recent burgeoning econometric literature on microfinance. This is partly because they are often incomprehensible to folk who have not undertaken postgraduate studies in econometrics; partly because some of them draw conclusions that are based on highly dubious assumptions (sometimes hidden away in small print); and, partly because some of them ask foolish questions. To a university-based econometrician with a dataset, asking ‘Is group lending better than individual lending?’ may seem sensible. But, as any practitioner will explain, both models are excellent … wherever they work well. The evolution of the microfinance industry has depended on specific institutions developing products that meet client needs at a reasonable cost in specific contexts and not on the identification of laws of development economics.

Many people have helped to assemble this collection. First and foremost we must express our gratitude to the contributors and to the publishers of their original papers and books. We are especially grateful to David Clark, Leonith Hinojosa . . .

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