The International Handbook on Social Innovation
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The International Handbook on Social Innovation

Collective Action, Social Learning and Transdisciplinary Research

Edited by Frank Moulaert, Diana MacCallum, Abid Mehmood and Abdelillah Hamdouch

The contributors provide an overview of theoretical perspectives, methodologies and instructive experiences from all continents, as well as implications for collective action and policy. They argue strongly for social innovation as a key to human development. The Handbook defines social innovation as innovation in social relations within both micro and macro spheres, with the purpose of satisfying unmet or new human needs across different layers of society. It connects social innovation to empowerment dynamics, thus giving a political character to social movements and bottom-up governance initiatives. Together these should lay the foundations for a fairer, more democratic society for all.
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Chapter 6: Microcredit as a social innovation

Collective Action, Social Learning and Transdisciplinary Research

Arvind Ashta, Karl Dayson, Rajat Gera, Samanthala Hettihewa, N.V. Krishna and Christopher Wright


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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