Collective Action, Social Learning and Transdisciplinary Research
Elgar original reference
Edited by Frank Moulaert, Diana MacCallum, Abid Mehmood and Abdelillah Hamdouch
Chapter 6: Microcredit as a social innovation
Microcredit is considered as an innovative system of lending aimed at financial inclusion of the poor. Hailed as a messiah by some and as a demon by others, it has, nevertheless, enabled more than 150 million families to take loans. Why is it a social innovation? And why has this social innovation gone where bankers feared to tread? Essentially, as this chapter details later, a novel system of group lending to women coupled with dynamic incentives led to steep reductions in risk and transaction costs, permitting the poor to be profitable customers. Microfinance is conceptualized and operationalized as a means of poverty alleviation. Poverty alleviation is the act of reducing the scourges of poverty of an individual or community. Principal factors identified by the literature as being responsible for poverty include market failure (economic exclusion), regional disparities (spatial exclusion), and low-status (cultural exclusion). These factors reinforce each other as components of deprivation and exclusion and have causal and dynamic connections (on these cumulative dynamics, see e.g. Antohi 2009).
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