Microfinance in Crisis Working Papers Series

This series is published by the Microfinance in Crisis project located within the UMR 201 Développement et Sociétés (Patis I Sorbonne University/Institute of Research for Development). The project, Microfinance in Crisis, has been selected in October 2011 by the European Investment Bank University Research Sponsorship Programme (EIBURS) and has started in March 2012. This research project aims to offer a global analysis of the main microcredit delinquency factors (such as governance, regulation, market saturation and political influence), from the perspective of supply, demand and environment. The research will look into the exact nature and interaction among identified recurrent factors in different economic, growth and market maturity context, with the view of building a typology of delinquency crises. The work of the project is mainly in the fields of development economics, anthropology and political economy.

How good repayment performances can harm borrowers: Evidence from the Dominican Republic – Working Paper 3

by Solène Morvant-Roux, Joana Afonso, Davide Forcella and Isabelle Guérin

High-standard MF service provision within a regulated and expanding industry, with low PAR and widely used credit bureaus, does not necessarily bring about positive social outcomes for clients. In the context of a highly dynamic MF industry, it can contribute to clients’ financial fragility. Here we give evidence from the Dominican Republic.

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Explaining participation and repayment in microcredit schemes in rural Morocco: the role of social norms and actors – Working Paper 2

by Solène Morvant-Roux, Isabelle Guérin, Marc Roesch and Jean-Yves Moisseron

This paper uses microcredit demand and use in rural Morocco as a case study to examine how households appropriate microcredit services. This work draws on qualitative analysis aiming at completing a randomized study. While agro-ecological conditions count, microcredit demand and use is also shaped by two major factors which partially interrelate: debt-related norms articulated with the perception of the sanction in case of non-repayment, and the “social life” of microcredit, namely, how local social actors, not least credit officers and local leaders, engage with microcredit. On a theoretical level, we argue that microcredit “markets” do not result from supply confronting demand, but emerge within a historically and socially produced, instituted process.

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Households’ over-indebtedness and the fallacy of financial education: insights from economic anthropology – Working Paper 1

by Isabelle Guérin

Financial education become a rallying cry to tackle households’ over-indebtedness. Behavioral finance has examined financial education in some depth to highlight both its scope and limitations, arguing that information is only one of many components in financial decision making processes. Political economists and lawyers have strongly criticized financial education on the grounds that it entails the excessive responsibilisation of individuals at the expenses of regulation and state intervention. This paper draws on the lessons of economic anthropology to offer a further critical analysis of financial education. Its main purpose is to reject the central tenet of financial education promoters, namely that the poor are financially illiterate. Basic concepts that have generally been taken to have universal significance are in fact highly arbitrary and reflect a very particular vision of the world. Perceptions related to vision of time, relationship to others or moral obligations are not necessarily the same everywhere. Different perceptions of these elements can lead to radically diverging perceptions of debt, interest rates, repayment obligation, or even planning from ‘usual’ modes of thinking. Our analysis calls for the reassessment of financial illiteracy as a theoretical concept. From a policy perspective, it shows that classical financial education training programmes are unlikely to be effective as long as they fail to address local knowledge.

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