More about the pros and cons of microfinance

In this post I excerpted some articles about the problems with microfinance. See also this 2011 post by David Ruccio. Today a little more about this, also thanks to commenters Morgan and Bateman.

A) Microfinance can be beneficial as shown by Colvin and McLaughlin who investigate farmers cooperative banks around 1900 (when the rise of chemical fertilizer and an increasing use of other purchased inputs caused liquidity problems for many small farmers’. They show that the board members of these very local savings banks were as a rule not paid. Also: `What was the recipe for the success of Raiffeisen’s banking model? What made it possible for imitations of this German rural cooperative microfinance institution to work well in some European countries, but fail in others? This paper answers these questions with a comparison of Raiffeisenism in Ireland and the Netherlands. Raiffeisen banks arrived in both places at the same time, but had drastically different fates.