Poverty Targeting in Asia

Poverty Targeting in Asia

Edited by John Weiss

Following a comprehensive overview by the editor, this book offers a detailed assessment of the results of directly channelling resources to the poor and extensively discusses the experience of five Asian countries – India, Indonesia, the People’s Republic of China, the Philippines and Thailand.

Chapter 7: Micro-finance and Poverty Reduction in Asia

John Weiss, Heather Montgomery and Elvira Kurmanalieva

Subjects: asian studies, asian development, asian economics, development studies, asian development, development economics, economics and finance, asian economics, development economics

Extract

John Weiss, Heather Montgomery and Elvira Kurmanalieva INTRODUCTION The micro-finance revolution has changed attitudes towards helping the poor in many countries and in some has provided substantial flows of credit, often to very low-income groups or households, who would normally be excluded by conventional financial institutions. Bangladesh is the starkest example of a very poor country, where currently roughly one quarter of rural households are direct beneficiaries of these programs (Khandker, 2003). Much has been written on the range of institutional arrangements pursued in different organizations and countries and in turn a vast number of studies have attempted to assess the outreach and poverty impact of such schemes. However, amongst the academic development community there is a recognition that perhaps we know much less about the impact of these programs than might be expected given the enthusiasm for these activities in donor and policy-making circles. To quote a recent authoritative volume on micro-finance: MFI field operations have far surpassed the research capacity to analyze them, so excitement about the use of micro-finance for poverty alleviation is not backed up with sound facts derived from rigorous research. Given the current state of knowledge, it is difficult to allocate confidently public resources to micro-finance development. (Zeller and Meyer, 2002) This is a very strong statement of doubt and in part reflects lack of accurate data, but also in part methodological difficulties associated with assessing exactly what proportion of income and other effects on...

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