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Revised Chapter 3

In my continuing editing pass, I've just gone over chapter 3, Credit History (.doc, .pdf)

This chapter covers the deep history of financial services for the masses, a subject that is close to my heart, however little or great its practical value.

Mapping Development Trends in Google N-Grams

A few days ago, Google put online a tool designed as a time-suck for the holiday season (HT to Marginal Revolution for the link).  Google N-gram viewer allows you to type in some search terms and it spits out how often those terms appear in Google Books by year of publication.  Google books now contains 5,195,769 digitized books –or about 4% of all books ever published—so that it’s a pretty powerful tool to monitor cultural trends.

Recalibrating Microfinance: A Six-Point Program

This is a guest post from Elisabeth Rhyne, managing director of the Center for Financial Inclusion at Accion International, based on her presentation at this month's public discussion of the global implications of the microcredit crisis in India.

In a private email a couple of weeks ago, David Roodman challenged a few of his contacts in the microfinance sector. He wrote, “Commercial microfinance is under attack in way that it has not been for a long time. Milford Bateman has published his book arguing that it is doomed by its very nature. Yunus is publicly chastising investor-owned MFIs and pinning blame for the ‘wrong turn’ toward investor-owned MFIs on the ‘World Bank.’ And there is the debacle in India.”

As usual, David is right. The current crisis in microfinance in Andhra Pradesh is the most serious challenge to the microfinance sector in its brief history. In the wake of the crisis, calls are arising to “recalibrate” microfinance, or, as Vijay Mahajan put it, to “get the house in order.” While the origins of the crisis are complex, and many of them are India- and AP-specific, the crisis reveals shortcomings in microfinance that urgently need to be addressed.

This recalibration needs to be as vigorous as we can possibly make it. As I think about past crises---in Bolivia, Nicaragua, and in AP in 2006, I am struck by the sluggishness of the response by the industry. Those in the thick of the crisis learned some lessons---the hard way---but the rest of the industry has tended to shrug it off as someone else’s problem. Complacency rules, as it does in most things where human beings are involved. Compare this to the world response to climate change---some responses, but nothing like what is needed. Al Gore’s charge has been: WAKE UP! And that is my call to microfinance. Because microfinance is a much smaller arena than global climate change, we have a more manageable set of tasks.

Herewith, a Six-Point Action Agenda.

Get serious about Client Protection. We started working on what is now the Smart Campaign two years ago. When I look back, I see that we have made enormous progress. The microfinance community has come together around a set of six Client Protection Principles. These principles are widely known and accepted. At first, we often heard MFI leaders say “We don’t need to work on client protection because we’re already doing a good job” or “We aren’t convinced of the business case for client protection.” No one says that today. But there is still a long way to go before client protection practices are robust enough to prevent future problems in avoiding over-indebtedness (Principle 1) or increasing pricing transparency (Principle 2).

The 2000s Were the Best Decade Ever? Development Optimist Charles Kenny

Charles KennyMany of us may be glad to be rid of the Naughts, a decade perhaps destined to be remembered for global terrorism, U.S. wars in Iraq and Afghanistan, and a global financial crisis that threatened a second Great Depression but left the rich world instead with a lingering Great Recession. My guest this week argues that the departing decade is unfairly maligned.

Climate: Is a Big Technology Push Really Enough?

I’ve been mulling over this problem ever since I finished this paper with Arvind Subramanian. We conclude that to deal with the climate change threat to human well-being and livelhoods as we know them today requires an extraordinary technological revolution – not just reducing carbon content but completely eliminating it, i.e. completely severing the link between burning fossil fuel and generating energy.

Fingerprint Haiti Now: Biometrics in Haiti, One Year Later

This is a joint post with Caroline Decker.

Less than a month until the anniversary of the earthquake that devastated the Haitian capital, 1.3 million still live in tents, clean water remains an issue with cholera rapidly spreading, and millions of cubic meters of debris litter the streets, hampering rebuilding efforts. But Haiti was hardly in great shape before the earthquake. Despite years of assistance, 80% of its population was living under the poverty line, 2 out of 3 Haitians did not have a formal job, and infrastructure was minimal.

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