From Prophecy to Charity: How to Help the Poor
AEI Press, 2011
From Prophecy to Charity: How to Help the Poor
AEI Press, 2011
Why Finance Matters
Science, vol. 332, 10 June 2011: 1271-1272.
Roughly one-half of the world’s adults, about 2.5 billion people, have neither a bank account nor access to semiformal financial services such as “microcredit,” the growing practice in developing nations of providing small loans, typically less than US$500, to self-employed people. But what if they did? Muhammad Yunus, the 2006 Nobel Peace Prize winner and founder of Bangladesh’s Grameen Bank, a pioneering microcredit institution, argues that this lack of financial access means that the poor, especially poor women, can’t obtain the loans they need to build their businesses and get on a path out of poverty. The idea has taken hold: In 2009, for instance, Grameen Bank served 8 million customers; its average loan balance was just $127. Worldwide, microcredit advocates now claim more than 190 million customers. Proof of concept, however, is not proof of impact. Recent studies have found that some efforts to provide small loans have produced surprisingly weak results, and in this issue, Karlan and Zinman provide more evidence that we need to rethink microcredit. Their findings, from a randomized evaluation of microcredit lending in the Philippines, adds to a handful of recent results that suggest that microcredit’s effectiveness has been overstated by studies that selectively focus on success stories.
Microfinance and Social Investment
Annual Review of Financial Economics, vol. 3, ed. Robert Merton and Andrew Lo. 2011: 407-434.
Conning, J. & Morduch, J.
This paper puts a corporate finance lens on microfinance. Microfinance aims to democratize global financial markets through new contracts, organizations, and technology. We explain the roles that government agencies and socially-minded investors play in supporting the entry and expansion of private intermediaries in the sector, and we disentangle debates about competing social and commercial firm goals. We frame the analysis with theory that explains why microfinance institutions serving lower-income communities charge high interest rates, face high costs, monitor customers relatively intensively, and have limited ability to lever assets. The analysis blurs traditional dividing lines between non-profits and for-profits and places focus on the relationship between target market, ownership rights and access to external capital.
Credit is Not a Right
Gershman, John and Jonathan Morduch.
Is credit a human right? Muhammad Yunus, the most visible leader of a global movement to provide microcredit to world’s poor, says it should be. NYU’s John Gershman and FAI’s Jonathan Morduch disagree. In their new paper, Credit is Not a Right, they ask whether a rights-based approach to microcredit will in fact be effective in making quality, affordable credit more available to poor families – and, more importantly, whether it is a constructive step in terms of the broader goal of global poverty reduction. Jonathan Morduch argues his case in this video.
Expanding Work Programs for Poor Men
AEI Press, 2011.
Mead, Lawrence M.
Borrowing to Save
Journal of Globalization and Development 102 (2), December 2010.
Poor families often borrow even when they have savings sufficient to cover the loan. The practice is costly relative to drawing down one’s own savings, and it seems particularly puzzling in poor communities. The families themselves explain that it is easier to repay a moneylender than to “repay” oneself, an explanation in line with recent findings in behavioral economics. In this context, high interest rates on loans can help instill discipline. While workable, the mechanism is hardly optimal; options could be improved through access to a contractual saving device that helps savers rebuild assets after a major withdrawal.
Using cross-curricular, problem-based learning to promote understanding of poverty in urban communities
Journal of Social Work Education, 46(1), 147 – 156.
Gardner, D., Tuchman, E., & Hawkins, R.
This article describes the use of problem-based learning to teach students about the scope and consequences of urban poverty through an innovative cross-curricular project. We illustrate the process, goals, and tasks of the Community Assessment Project, which incorporates community-level assessment, collection and analysis of public data, and social policy analysis and planning. Students in three master's classes (Social Work Research I, Ending Poverty: Models for Social Change and Social Action, and Advanced Social Policy in Aging) worked in self-directed groups to explore the impact of economic insecurity on our most vulnerable clients. The project engaged students, linked research and policy practice, and helped to educate the next generation of social workers about urban poverty and strategies for community-based research and practice.
Why We Need Work Programs for Fathers
Journal of Policy Analysis and Management, Vol. 29, no. 3
The Economics of Microfinance, 2nd edition
Cambridge, MA: MIT Press.
Beatriz Armendáriz and Jonathan Morduch
1 Rethinking Banking
2 Why Intervene in Credit Markets?
3 Roots of Microﬁnance: ROSCAs and Credit Cooperatives
4 Group Lending
5 Beyond Group Lending
6 Savings and Insurance
8 Commercialization and Regulation
9 Measuring Impacts
10 Subsidy and Sustainability
11 Managing Microﬁnance
Half the World is Unbanked
Financial Access Initiative Report, October 2009. Feature in McKinsey Quarterly, March 2010
Jonathan Morduch, Alberto Chaia, Aparna Dalal, Tony Goland, Maria Jose Gonzalez, and Robert Schiff
Limited information on the size and nature of the global population using financial services limits policy makers’ abilities to identify what’s working and what’s not, and it limits financial services providers’ abilities to identify where the opportunities lie and where they could learn from current successes.
A new report, “Half the world is unbanked,” provides an improved estimate of the size and nature of the global population that does and does not use formal (or semiformal) financial services.
This paper builds on a data set compiled from existing cross-country data sources on financial access and socioeconomic and demographic characteristics to generate an improved estimate of the size and nature of the global population that does and does not use formal (or semiformal) financial services.