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Is Microfinance Pushing the World’s Poorest Even Deeper Into Poverty?

By Sebastian Strangio
The New Republic

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Karim_microfinance coverSkepticism of microfinance and its benefits, meanwhile, has migrated to the academy as well. Lamia Karim, an anthropologist at the University of Oregon and the author of Microfinance and Its Discontents, has questioned the claim that offering small loans directly to Bangladeshi women has been empowering. On the contrary, she has found women are often pressured to hand over loans to their husbands or male relatives. At the same time, microcredit agencies have created what she terms an “economy of shame,” in which the traditional role of women as bearers of “family honor” is used to leverage repayments—a key yardstick of MFIs’ success. (Grameen, for instance, proudly trumpets a loan recovery rate of close to 97 percent). To avoid the public shame of default, many women take out additional loans from different lenders, and quickly find themselves mired in a quicksand of debt. ...

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