Handbook on Development and Social Change
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Handbook on Development and Social Change

Edited by G. H. Fagan and Ronaldo Munck

This Handbook provides an accessible critical review of the complex issues surrounding development and social change today. With chapters from recognized experts, examining economic, political and social aspects, and covering key topics and developing regions, it goes beyond current theory and sets out the debates which will shape an approach better suited to the modern world.
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Chapter 7: Small loans, big problems: the rise and fall of microcredit as development policy

Milford Bateman


From 2007 onwards many institutions within the international development community and a growing number of developing country governments began to abandon the microcredit development model. The focus of this chapter is to briefly explain this turn of events. The first section (Historical twists and turns) charts the heady rise to fame of the microcredit model following its ‘discovery’ in Bangladesh in the 1980s. Section two (But then the downfall begins) provides a summary of the key milestones in its rapid transition after 2007 into a failed development intervention, ultimately requiring its incorporation within the financial inclusion movement to help keep it alive. The third section (Three fundamental flaws of the microcredit model) first describes the two fundamental flaws in the basic microcredit model, before going on to point out the very significant flaws created by the turn to a new commercialized, or ‘neoliberalized’, microcredit model in the 1990s.

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