Chapter 3 Main Post: Credit History

Microfinance is a modern phenomenon, right? Maybe thirty years old?Wrong.When what is now chapter 3 (.doc .pdf) was but a twinkle in my eye, I thought it would be just a few paragraphs near the top of what is now chapter 4. But as I delved into its subject--the long history of projects to bring financial services to poor people--the terrain expanded before me and drew me in. I do believe this is the fullest review of that history, but it is superficial relative to the richness of its subject. Someone should write a book on this topic.From the intro of chapter 3:

To the extent that microfinance is older than most enthusiasts and practitioners think it is, that begs the question of what lessons from history are being missed. What are the constants of history? What are the variables? How do economic and cultural characteristics of a country, such as wealth and tightness of community bonds, determine which methods succeed? And since history never repeats itself exactly, how does modern microfinance break from the past? What have today’s innovators contributed to the long historical flow of ideas? Those questions motivate this excursion into history.

Another revelation for me in drafting this chapter is the power of Google Books. In its database are scanned images of thousands of rare and ancient books, books once only accessible to small handfuls of people but now freely available to anyone with an Internet connection. It is as if a light has been turned on on the past. It has become easier to read 200-year-old books online than 2-year-old ones. And in those old books, we find people as intelligent as ourselves pondering and debating questions that occupy us today. Now, for example, you can read both volumes of a history of savings banks in the United States published in 1876 and read an account by Priscilla Wakefield, the forgotten heroine of financial services for the poor, of how she started what was arguably the first savings bank in 1801. See my bibliography of historical materials on financial services for the poor for more examples.Post comments on chapter 3 as comments on this blog entry. I'd be particularly interested in historical examples of financial arrangements from outside North America and Europe, especially ones a step up in formality from the ubiquitous ROSCAs and ASCAs (which are defined near the beginning of the chapter). The chapter's scope is limited by what is available to me in English. Also, I need to learn more about the history of insurance for the masses.Thanks to Nancy Birdsall and Lawrence MacDonald for edits of earlier drafts.