Microfinance and the Business of Poverty Reduction: Critical Perspectives from Rural Bangladesh

Bobby Banerjee, Laurel Jackson
2013 Academy of Management Proceedings  
This is the accepted version of the paper. This version of the publication may differ from the final published version. Permanent repository link: http://openaccess.city.ac.uk/16138/ Link to published version: http://dx. Abstract In this paper we provide a critical analysis of the role of market-based approaches to poverty reduction in developing countries. In particular we analyze the role of microfinance in poverty alleviation by conducting an ethnographic study of three villages in
more » ... . Microfinance has become an increasingly popular approach that aims to alleviate poverty by providing the poor new opportunities for entrepreneurship. It also aims to promote empowerment (especially among women) while enhancing social capital in poor communities. Our findings, however, provide a different narrative. We found microfinance led to increasing levels of indebtedness among already impoverished communities and exacerbated economic, social and environmental vulnerabilities. Our findings contribute to the emerging literature on the role of social capital in developing entrepreneurial capabilities in poor communities by recounting narratives from voices that tend to be excluded in the debate on inclusive growth. Microfinance and the business of poverty reduction: Critical perspectives from rural Bangladesh 'Grameen Foundation helps the world's poorest, especially women, improve their lives and escape poverty by helping to provide access to appropriate financial services new ways to generate income......By helping local microfinance institutions and other poverty-focused organizations become more effective we've helped millions pull themselves out of poverty' (Grameen Foundation, 2012). 'Nothing can stop an idea whose time has gone. And micro-finance is in a danger zone. It is a discredited model. It has raised more questions that it has answered. To think that we are going to alleviate poverty is a tall claim. Microfinance has promised more than it has actually delivered, created more problems than actually solved and continues to promise much more than what it actually puts on the ground' (Jairam Ramesh, Indian Rural Development Minister, 2012).
doi:10.5465/ambpp.2013.11793abstract fatcat:74xejxho3zaodl375zemhqtely