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GY309 Microfinance Exam Questions - 2018: How far do you agree that micro-finance can empower women? Discuss with reference to examples. - 2017: ’Microfinance democratises capital’. Critically evaluate this statement. - 2016: ’Microfinance has been hailed as promoting entrepreneurship and women’s empowerment’. Critically discuss this statement. - Advocates represent the poor as ‘bankable’; critics as victims of finance capitalism. How far has micro-finance lived up to promises; to what extent have the poor benefited - To what extent to you agree with the statement that ‘micro-finance can convert poverty into capital’ (Prahalad, 2004). - Discuss the claim that micro-finance represents ‘the active frontier of contemporary capitalism’ (Roy, 2010: 229). Structure - Interrogate by how development became excited by premise of microfinance - Consider origins of microfinance, and rise to ubiquity within development - Examine critiques of microfinance as development panacea - How poor are represented and treated by NGOs, private sector, etc. - Beginning: late 1990s and early 2000s Birth and rise of microfinance - Builds on system already in place in many communities —> transformation - MFIs risen to prominent agent in development - Muhammad Yunus: returned back to newly founded Republic of Bangladesh after gaining high expertise and education - Observes inability of rural women to make income from produced bamboo furniture —> problem: lack of credit - Other problems could be identified, e.g. asymmetric power of market or gender dynamics - Loans 27$ to 42 women —> slight profit of selling furniture —> success - Grameen bank founded in 1983 —> issued $6.38 bn to 7.4m borrowers until 2007 - Lazar (2004): Repayment of loans ensured through solidarity groups - Function by all of member of group becoming guarantors on others loans —> collective covering of loss - Relies on system of existing community solidarity, but establishes it in finance - Nobel Peace Prize (2006): ‘for advancing economic and social opportunities for the poor, especially women, through their pioneering microcredit work’ - Business should consider poor as potential market - Large untapped market who are rational —> will buy from companies, if prices are right - MFIs help bring people into market Microfinance and neoliberal development - Exciting idea coming from within Global South —> fits ‘no harm’ concept of development - Uses existing structures (community solidarity notion), concepts and structures (trading groups) - Outside of government —> less corruptible, fiscally responsible, and promoting entrepreneurship - Development agendas: good governance, pro-women, empowerment, social capital, pro-poor, poverty alleviation - Verifiable ‘impact assessments’ —> reach poor, repayment rates, repeat customs (loan cycles) - Paradigm shift in microfinance away from ethical business - Yunus original model: credit access as human right —> solution from below —> non-profit microfinance - Creative capitalism: bring people into capitalist system —> faith in markets —> for profit microfinance? Microfinance for profit - MFIs can build productive portfolio and ‘mature’ to micro-bank - Drop social welfare aspect, and operate through banks to formalise arrangements - NGO (1990) to turn into bank (2000): Compartamos (Mexico) - ‘Big Banks’ enter microfinance (CitiBank, ING, Deutsche Bank) and set up MFIs arms - 91% of international ‘lending’ goes to 6% of MFIs - Kiva: scheme to fund small-scale business owners in South (women) - 20% chance of money going through ‘for profit’ bank - Transparency issues Microfinance as development panacea - Informal economy engine for economic growth - Micro-loans promote informal sector to detriment of addressing structural causes of poverty and exclusion - Look to civil society for solution of development —> force for positive change Bateman (2012) - Scale: medium-sizes farms most sustainable, efficient, and equitable - Subsistence farms low level of output (no profit), whereas large firms funnel money to small elite

- Microfinance in Malawi only available to small subsistence farmers, whereas medium-sized farmers need other kinds of substantial investment and credit assistance

- Small farms unwilling to use fertilisers through microfinance (interest payment would swallow output gains from fertiliser) - Subsistence farmers with repaying issues may lose land - Government programmes introduces subsidies to use of fertilisers —> take-up high —> yields up —> Malawi from food deficit nation to exporting food

- State assistance created broader change Roy (2010) Microfinance as accumulation by dispossession - Seeks to democratise capital and simultaneously convert microcapital of poor into new global financial flows - Celebrate idea of people’s economy —> bring all human interaction into market - Way to invent new spatio-temporal fix to move Soederberg (2013) Microfinance about disciplining the poor - Highlights point of comparison with subprime mortgage loans that triggered financial crisis - Low-income subjects disciplined Microfinance as empowering women - Seen as more credit-worthy —> more likely to invest in children - May end up with greater workload and stress due to worry over debt - Quite often money controlled by male head of household - May lead to family disagreements and gender-based violence - Postpones feminist concerns with redistribution of household work and limits exposure to public

Rankin (2013) A Critical Geography of Poverty Finance Abstract - Probes claims about nature of poverty, the poor, states and markets that surfaced in aftermath of financial crisis - Aim: generate new understanding of neoliberal global finance by comparing subprime mortgage loans with microfinance - Social constitution of risk through racialised and gendered forms of difference - Exercise of dispossession and imperialism by financial means - Articulations of poverty finance with the social relations of debt in specific conjunctures - Terrains of inquiry: subjectivity and risk, imperialism and dispossession Introduction - Critical development studies —> paradox in unfolding of 2007/08 financial crisis - Poverty finance celebrated as key vector of poverty alleviation and neoliberalisation in Third World development - Financial meltdown in metropolitan core —> blamed for instability of global financial system - Donors of neoliberal development ideologies continue to promote ‘bottom of the pyramid capitalism through microfinance programmes, making loans to poor women in agrarian periphery’ - Stringent neoliberal ideologues cast defaults in subprime mortgages in terms of dangers of lending to ‘publicly designated bad subjects’ (prematurely granted privilege of assuming private debt) —> subprime loans defined in terms of borrower type: poor, racialised and incapable of self-care - Hart: paradox of relational comparison - Opportunity to trace conceptual and material linkages among diffuse instances of financialisation - Generate deeper understandings and possibilities for alliance within/across different scales and sites of political practice - Paper: critical geography of poverty finance —> relational comparison of microfinance and subprime mortgage markets in context of global core-periphery relations to trouble conflations of financial inclusion and democratisation of finance - Relational analysis of 2 modes of poverty finance focuses on social constitution of risk through racialised and gendered forms of difference and exercise of imperialism and dispossession by financial means - Borrowers (racialised women) fail to conform to standard conventions of ‘bankability’ —> lack collateral and fixed incomes with which to secure loan Imperialism and dispossession - Commonality of ‘development’ orthodoxy and Wall Street system revealed when reading microfinance and subprime lending in parallel —> progressive vision about public purpose of credit system given to banking as mechanisms for selfexpansion of money capital - Ideological shifts require market rules to structure economic practice —> both neoliberalised microfinance and subprime lending derive from transformations in regulations governing financial markets, entailing removal of barriers to entry in both sectoral and geographic terms - Parallel reading foregrounds dispossessions that result when finance capital exploits geographies of social disadvantage and isolation - Harvey: formulation of accumulation by dispossession as characteristic feature of finance-led capitalism —> extracts wealth not through primary exploitation in production realm or direct enclosures of primitive accumulation, but through predation and fraud that turns poor households into new markets for financial instruments

- Mobilisation of racialised and gendered financial subjectivities —> poverty lending formulated as socio-spatial fix - Dispossession results when finance capital exploits new geographies of social disadvantage as socio-spatial fix to crises of -

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over-accumulation —> terrain of development embodies characteristics of financial imperialism —> spatial displacements of money capital contour the financialisation of social relations in territories peripheral to centres of financial power Subprime lending: regulations paved way for risk-based pricing and blocking consumer protection enabled conditions for predatory schemes —> deceptive teaser rates that later ballooned, undisclosed fees, etc. designed to lure borrowers in under-serviced communities —> falling wages increased vulnerable to risk Present crisis of over-accumulation: finance capital seeks spatial fix in poverty lending to Third World Clinton: ‘consider the poor of developing nations as viable investment alternatives to today’s turbulent markets Donors promote microfinance as market segment in context of global economic contraction Markets for poverty finance generated by convergence of donor and investor interest —> high-growth and high-performing microfinance institutions trading debt of ‘bankable’ poor —> microfinance encompasses practices resembling distinctive features of US subprime mortgage market - Seeking new, lower-cost sources of funding through development of secondary and equity markets - Institutional consolidation concentrates expertise in large MFIs with capacity to pool funds - Aggressive outreach goals necessary for securitisation —> shift from group to individual borrowers - Bundling, securitising and trading —> microfinance as asset class requiring technologies of ranking and benchmarking Frontier of speculative arbitrage will expose widening set of households, neighbourhoods and regions to financial shock and material and socio-emotional forms of dispossession Microfinance not outside of global financial crisis, but become subsumed within same ideological apparatus and regime of accumulation that fuelled crisis and threatens to extend reach of debt-driven dispossessions beyond American context Discovery of microfinance as frontier of financial imperialism reproduces racialised core-periphery relations of dependency and control on the terrain of poverty finance

Critical geography of poverty finance - Paradox: neoliberal donors continue to promote ‘bottom of the pyramid capitalism’ through microfinance programmes making loans to poor ‘Third World’ women, even as analysts harbouring same neoliberal proclivities ‘blame’ for the financial crisis the risk-inducing behaviour of racialised poor in cities of global North - Conceptual and material connections and mutual processes of constitution between 2 domains of poverty lending - Generate new understanding of neoliberal global finance and its entanglement in discrete governmental projects - US: poverty lending hinges around conflation of race and risk that innovates discriminatory modes of inclusion in financial markets made possible by legacies of racialised exclusion —> strips equity and wealth out of minority and immigrant neighbourhoods - Third World development microfinance specifies gender as idiom of identity to mitigate risk in uncertain market conditions —> model mobilises economies of care as politico-economic rational, affording expanded access to credit for women, but also security and profit for finance capital - Relational reading unmasks fetishism of free market by exposing contradictory claims and consistently exploitative outcomes —> denaturalisation of racialised dispossession of subprime foreclosure crisis through routine rationalisation in market terms Democratisation through poverty finance - Small-scale savings among poor enrolled in large-scale profit-making processes in name of empowerment and democratised development —> real conditions of possibility for democratisation through poverty finance - Material practices of ‘real’ regulation: evidence about vulnerabilities arising from neoliberalisation of poverty finance suggest role for regulation in furnishing social protections against these modes of profit making - Conceive financial system as site for more fundamental transformation oriented to universal provisioning and allowing people to use ‘debt with resilience’ - Scan for alternatives to neoliberal regulatory rationalities in market rules of distributive state regimes (Vietnam) and demands of social movements to democratise finance - Transformative regulatory response not promising —> indications point to enhanced role of state regulation in reproducing financialised capitalism in peripheries as much as in core - Kothari: ‘social change requires more and better politics, not just more and better regulation - Construct immanent critiques against claims that predatory lending schemes democratise finance and complete markets on inclusionary terms —> exposing injustices of setting can furnish creative insights into dynamics of another - Promise of democratised finance belied by gender and racialised disparities which become basis for extractive modes of accumulation - Occupy Wall Street takes struggle outside marginalised communities to engage the ’99%’ —> South increasingly viewed as site of anti-capitalist organising and activism, but microfinance rarely subject of critique of organised social movement - Third terrain of politics entails search for similarities in experience to become basis for alliance and collective action - Tightly coordinated tactics of social movements in metropolitan centres of North may be ill-equipped to tackle ideologies of empowerment and democratised development

Sohini (2018) Entrepreneurship and work at the ‘bottom of the pyramid’. In Financialising Poverty: Labour and Risk in Indian Microfinance Introduction - Mr. Ray switched to micro-financing following an ethical encounter, the moral voice of his father, denouncing his achievements in commercial banking - Commercial microfinance part of financial services, not development-oriented NGO - Enables borrowers to depend on MFI (micro financing institution) as sustainable institution - Investors support MFIs because of Mr. Ray’s reputation as banker - Mantra of social enterprise: doing financially well and socially good (macro-narrative of microfinance) - Mr. Bose established separate NGO to take on tasks of social work (keep separate) - Pursuit of dual goals complicated (ambiguity in how to account for social side) —> moral duty shot through concerns for sustainable and profitable business, attendant to risks of lending to the poor - Discussion of emergent culture of entrepreneurship —> popularisation of social businesses and idea that microentrepreneurship can serve as means to escape poverty - Interrogation of extent to which practices of MFIs and poor workers intersect with premise of entrepreneurship - Examination of how social business stories (narratives) sustain ideological premise (profit and social good) - Narratives celebrate Indian entrepreneurial spirit —> bolsters growth of social enterprises - Explore how social entrepreneurship coincided with explosion of bottom-of-the-pyramid (BOP) capitalism - Paradigm: poor no longer considered as passive objects of state-led development, but active market participants as consumers and entrepreneurs themselves - BOP goods and services transformed poor into new sources of capitalist accumulation - Extent to which poor benefited through BOP finance unclear - Explore precarious conditions of labour, now coded as micro-entrepreneurship in informal economy Foundational Narratives - Mr. Ray’s narrative about foundational moments of microfinance publicly available in newspaper interview - Protagonists (Mr. Bose and Mr. Basu) different personal and institutional origins: - Mr Bose: elite international education background and work experience in multinational bank - Mr Basu: middle-class background with grassroots experience in microfinance - Similar structural elements —> both pushed by close kin to further pursue work to do good for poor - Key turning points for men in foundation and development of MFIs - Key figures driving transformation of 2 book authors about microfinance were poor women - Like popular narratives, these autobiographical accounts of foundational moments demonstrate how moral and financial rationalities entangled in shaping corporate histories of microfinance - All narratives draw on form of sentimentality: emotionally suffused experience sympathy for others - Each MFI founder inspired by sentimental connection to do something for the poor (structures ethical dimension) - Sentimental accounts can gloss over structural forms of inequality - Sentimental narrative masks subtler ideological move - Financiers do not simply give money to poor women (she does not want charity) —> to help women they need to bring more money into microfinance (solution is investment) —> make money from supporting microfinance - Mr Bose and Mr Basu establish for profit institutions as primary focus —> reinforcement of capitalist market logics that implicitly critique welfare handouts as unsustainable - Sentimental narratives require disentanglement of ideological work: sustaining culture of entrepreneurship that celebrates self-sufficiency over dependence on state’s provision of services for the poor - Narratives of social businesses not celebrating free market, but use of sentimentality makes hard to disentangle from other discourses —> corporations invested in storytelling as part of social identities, which obscure the actual relations of production and division of labour they must organise and regulate The Culture of Entrepreneurship - Social businesses emerged within larger socio-cultural shift in celebration of entrepreneurial disposition and ethos - India: growing number of TV channels dedicated to 24h news coverage of business and finance and growing popularity of business degrees and valorisation of business figures - Appadurai (2015): transformation of middle class into ‘business junkies’ - Homeownership (mortgages and financing) and sport (franchising, trading players, team ownership) increasingly subject to business analysis —> start-up entrepreneurs become heroes - Dissemination of business knowledge happens in own social and cultural context - Entrepreneurial personhood existed through mercantile ethnic (caste) groups —> advantage over other castes by mobilising capital through existing social connections (although professions no longer legally determined by caste) - Bookstores filled with nonfiction accounts on how to succeed in new economy through business - Bansal (2011): traits of social entrepreneurs ‘new breed’ who ‘think like entrepreneurs but feel and work for society - Thinkers: do not act on poverty/inequality because they ‘believe the world is a neat place, with boundaries - Feelers: give something —> if not coin, at least moment of compassion

- Thinking-feeling individuals: able to transcend divide to help bring about change by applying principles of business (social entrepreneurs) - Neither demanding radical social change, nor iconic figures like Mother Teresa - Draws on popular understanding of Hindu and Buddhist concept of karma (present circumstances predetermined by previous actions and current action shapes future ends) to make case fo social business - Assumes legitimacy of profit —> ‘profit does not equal greed’ / can be good as long as it does not crush ‘them’ - Maira (former chairman of Boston Consulting Group) turn to Gandhi (independent leader and critic of Western capitalism) for argument on loca...