In preparation for the panel discussion, what are some of the challenges that microfinance initiatives present in the arena of international development? How is microfinance supposed to help and where does it fall short of its promisses?
Microfinance aims to open the restricted systems of finance to those that had always been shut out from them: the pour. Institutions facilitate microcredit loans, such as a one-dollar donations at the checkout line in Whole Foods that finance an embroidery business of a pour Guatemalan woman, as described by Roy. Small loans like these, ideally with fair interest rates that don’t prey on the pour, allow for the pour to build up capitol and alleviate their poverty. Rather than simply giving impoverished communities aid, microfinance can give them an investment that will hopefully create new markets and one day grow so that the community no longer require foreign aid and the bureaucracies such aid is entangled in. Giving the pour access to credit is allowing them what some believe to be their human right and a ethical chance for them to improve their livelihood.
As microfinance expands globally, newer models are beginning to look more similar to those of large banks and investment firms—prioritizing profits over people. In this they loose the philanthropic nature that microfinance first dug its roots into, they will leave the pour much in the same place that they found them. Investing in the pour to pull them out of poverty, as the Garmeen Bank first did, can make real differences in lives. But if the market of the global north begins to use microfinance to produce a profit, than alleviating poverty is no longer the goal. In fact, alleviating poverty would mean the end to profiting off the pour. Without regulation, do free markets work for human development or economic development? “Microsharks” have been accused of predatory lending and patriarchal methods of extorting payments that hurts the women loan holders more than it helps. Microfinance may just become part of the financial institutions that disproportionally furthers the rich while leaving only scraps for the pour—a far cry from the model of democratizing capitol that microfinance strives to be.
Our panel discussion Thursday examined the pros and cons of micro-finance, specifically the Gameen model. One team talked about how Microfinance helps the poor and women in developing countries. Those in underdeveloped economies are at an economic disadvantage, they do not own land or they are not educated, they are much more inferior to men. However, microfinance is likely to help gender inequality and liberate women because lenders are likely to work more with women since they seem more reliable. The Grameen model has been modified in many different countries, it is employed with caution and can provide financial counseling and networking opportunities. This enables the poor to learn managerial skills and explore their financial options better. On the other hand, we had other classmates present the negatives to this ideology. Many developed financial institutions enter struggling economies with the intentions to reel in more income and knowing that the poor will not be able to pay loans back. Thus, borrowing becomes a vicious cycle in developing countries and unregulated interest caps take a serious toll on small communities. You cannot be empowered through debt, this will only continue to dig a financial hole. Overall, both teams did an exceptional job making a clear argument on the Grameen model. Microfinance is something we see and use everyday and it is important to be aware of our financial decisions.
Microfinance intents to allow poor people to become entrepreneurial and be able to rely in their work to overcome their unfortunately situation. Yunus, the inventor of the microfinance model, wanted help by improving the situation of the poor, instead of just donating money to corporations with the hope that they would give the donation to the poor. Microfinance model is meant to serve as an alternative to both formal bank system that excludes the poor and informal systems of finance that prey on the poor.In short, microfinance is about debt and in Yunus' model they believe "the poor are inherently entrepreneurial" and "the poor always pay back". Banks as Grameen Bank believe in empowerment of people, especially women. As big corporations observed and analyzed the potential gains from microfinance, new models started to come up. The banks already own most groups in society but they did not want to deal with the poor because they thought they would not be able to pay. As microfinance model started to prove that ideology wrong, they began to implement new model in different countries. Now that more models are out, poor people are looking at a change in the regulations that limit their production.
So just thinking post panel. While I don't exactly understand the differences between the US and China. What I understood from the panel is micro finance helped a lot of people convert their land into wealth.
It started in poorer neighborhoods, why can't that work for places in the US specifically Athens? As I understand it, this is one of the poorest towns in the US. There are a few people I've spoke to who said they are from Athens. They say they have 20 acres, someone even said 100. When I hear that I hear MONEY.
The opportunity hear is huge. While it seems like yea but its just a few months out the year, it is majority of the months out of the year. What is stopping someone from building a Mall with the essential stores in it. Maybe 2 floors or 3 floors high...
(KEEP READING FOR BRIEF PLAN)
I believe most students buy their clothing or shoes online since the options here are limited to Walmart and college stores.
While some people are fine with online shopping, others make a trip to Columbus for the mall. A mall 15 minutes away from campus with Essential stores like.
Clothing: H&M, Forever 21, PacSun Shoes: DSW, Footaction, Dicks Other: Target (taking up the whole 2nd floor)
I think with 23,000 it sounds small for a mall but if the only competition is 3 hours away round trip, there is a monopoly to tap into.
P.S. if somewhere in the contract the land owner negotiated that employees working in the mall have to give first priority to Athens raised citizens which creates jobs for the local town, helping it generate more cash flow throughout town.
Microfinance aims to open the restricted systems of finance to those that had always been shut out from them: the pour. Institutions facilitate microcredit loans, such as a one-dollar donations at the checkout line in Whole Foods that finance an embroidery business of a pour Guatemalan woman, as described by Roy. Small loans like these, ideally with fair interest rates that don’t prey on the pour, allow for the pour to build up capitol and alleviate their poverty. Rather than simply giving impoverished communities aid, microfinance can give them an investment that will hopefully create new markets and one day grow so that the community no longer require foreign aid and the bureaucracies such aid is entangled in. Giving the pour access to credit is allowing them what some believe to be their human right and a ethical chance for them to improve their livelihood.
ReplyDeleteAs microfinance expands globally, newer models are beginning to look more similar to those of large banks and investment firms—prioritizing profits over people. In this they loose the philanthropic nature that microfinance first dug its roots into, they will leave the pour much in the same place that they found them. Investing in the pour to pull them out of poverty, as the Garmeen Bank first did, can make real differences in lives. But if the market of the global north begins to use microfinance to produce a profit, than alleviating poverty is no longer the goal. In fact, alleviating poverty would mean the end to profiting off the pour. Without regulation, do free markets work for human development or economic development? “Microsharks” have been accused of predatory lending and patriarchal methods of extorting payments that hurts the women loan holders more than it helps. Microfinance may just become part of the financial institutions that disproportionally furthers the rich while leaving only scraps for the pour—a far cry from the model of democratizing capitol that microfinance strives to be.
Our panel discussion Thursday examined the pros and cons of micro-finance, specifically the Gameen model. One team talked about how Microfinance helps the poor and women in developing countries. Those in underdeveloped economies are at an economic disadvantage, they do not own land or they are not educated, they are much more inferior to men. However, microfinance is likely to help gender inequality and liberate women because lenders are likely to work more with women since they seem more reliable. The Grameen model has been modified in many different countries, it is employed with caution and can provide financial counseling and networking opportunities. This enables the poor to learn managerial skills and explore their financial options better. On the other hand, we had other classmates present the negatives to this ideology. Many developed financial institutions enter struggling economies with the intentions to reel in more income and knowing that the poor will not be able to pay loans back. Thus, borrowing becomes a vicious cycle in developing countries and unregulated interest caps take a serious toll on small communities. You cannot be empowered through debt, this will only continue to dig a financial hole. Overall, both teams did an exceptional job making a clear argument on the Grameen model. Microfinance is something we see and use everyday and it is important to be aware of our financial decisions.
ReplyDeleteMicrofinance intents to allow poor people to become entrepreneurial and be able to rely in their work to overcome their unfortunately situation. Yunus, the inventor of the microfinance model, wanted help by improving the situation of the poor, instead of just donating money to corporations with the hope that they would give the donation to the poor. Microfinance model is meant to serve as an alternative to both formal bank system that excludes the poor and informal systems of finance that prey on the poor.In short, microfinance is about debt and in Yunus' model they believe "the poor are inherently entrepreneurial" and "the poor always pay back". Banks as Grameen Bank believe in empowerment of people, especially women.
ReplyDeleteAs big corporations observed and analyzed the potential gains from microfinance, new models started to come up. The banks already own most groups in society but they did not want to deal with the poor because they thought they would not be able to pay. As microfinance model started to prove that ideology wrong, they began to implement new model in different countries. Now that more models are out, poor people are looking at a change in the regulations that limit their production.
So just thinking post panel. While I don't exactly understand the differences between the US and China. What I understood from the panel is micro finance helped a lot of people convert their land into wealth.
ReplyDeleteIt started in poorer neighborhoods, why can't that work for places in the US specifically Athens?
As I understand it, this is one of the poorest towns in the US. There are a few people I've spoke to who said they are from Athens. They say they have 20 acres, someone even said 100. When I hear that I hear MONEY.
The opportunity hear is huge. While it seems like yea but its just a few months out the year, it is majority of the months out of the year. What is stopping someone from building a Mall with the essential stores in it. Maybe 2 floors or 3 floors high...
(KEEP READING FOR BRIEF PLAN)
I believe most students buy their clothing or shoes online since the options here are limited to Walmart and college stores.
While some people are fine with online shopping, others make a trip to Columbus for the mall. A mall 15 minutes away from campus with Essential stores like.
Clothing:
H&M, Forever 21, PacSun
Shoes:
DSW, Footaction, Dicks
Other:
Target (taking up the whole 2nd floor)
I think with 23,000 it sounds small for a mall but if the only competition is 3 hours away round trip, there is a monopoly to tap into.
Anyways,
JUST SOME QUESTIONS AND AFTER THOUGHTS
-- TERELL GIORDANI
This comment has been removed by the author.
DeleteP.S. if somewhere in the contract the land owner negotiated that employees working in the mall have to give first priority to Athens raised citizens which creates jobs for the local town, helping it generate more cash flow throughout town.
Delete