Archive for March, 2009

Princeton Microfinance Organization presents:

“The Green Ladder Out of Poverty: Accessing Clean Tech Through Microfinance”

Discussion with Betsy Teutsch of Green Microfinance

Event details are as follows:

Date: Thursday, April 2, 2009
4:30 pm
Robertson Bowl 002

How microfinance empowers the poor, enables leadership at a grassroots level, and brings about socioeconomic benefits is widely documented. Fewer people know, however, that this revolutionary invention also alleviates environmental problems, and it is this aspect of microfinance that the lecture will address.

Our speaker Betsy Teutsch is the Director of Communications at GreenMicrofinance.org, a hybrid social for-profit business as well as non-profit, which utilizes microfinance to address climate change and promote environmental justice. She is also a prolific Judaica artist, the founder of Philadelphia’s www.PhillyFreeCycle.org and the Mt. Airy Greening Network. Her blog, http://www.moneychangesthings.blogspot.com/ has featured many articles which discuss the relationship between sustainability and microfinance.

After the presentation, Ms. Teutsch will be staying for an informal dinner discussion catered by Thai Village. If you’d like to attend, please email Ting-Fung at tfchan@princeton.edu.

Read Full Post »

Register here for the Penn Microfinance Conference.

Remember, when registering, PMO members should list “Princeton Microfinance Organization” as their affiliation.

Read Full Post »

Just a little teaser for the topic of our Spring Colloquium (information will be posted soon!).

Though this is not explicitly microfinance related, this kind of innovation in health care is interesting to keep in mind when discussing development issues.

“Everyone is willing to throw in aid to developing countries. But talk about sustainable investment, no one is interested!”

Definitely thought provoking.

Watch. Think. Get involved.

Read Full Post »

In her paper, “Banking on Each Other: The Situational Logic of Rotating Savings and Credit Associations,” UC Davis Sociologist, Nicole Woolsey Biggart makes an attempt to determine under what social conditions microlending and rotating savings and credit associations (RoSCAs) are likely to succeed or fail.

Since Microfinance has been spreading very quickly, it is important to determine the situations under which it may succeed or fail. While in the economic logic of credit granting, large numbers of lenders are paired with large numbers of borrowers who are screened for creditworthiness. The use of large numbers creates a sort of safety buffer for default since risk is spread over a large number of transactions. Roscas and Microfinance, on the other hand, operate on a similar logic—with the aim of lowering default—but by utilizing different structures. Instead of spreading risk over a large number of transactions, tight-knit groups in effect enforce loan repayment, and by doing so drastically reduce risk. Such social enforcement allows for those with no credit to get loans, and for those loans to be given without a great fear of borrowers defaulting on the loans.

Due to the high reliance on social enforcement, there are only certain settings where less regulated or informal financial institutions can be expected to succeed. The following five characteristics of social settings were picked out by Biggart as conducive to Microfinance and Roscas.

1. Communally based social order

2. Obligations are collective

3. Social and economic stability of individuals

4. Social and geographic isolation

5. Similarity of social status

The “Community based social order” condition is one that indicates the societies must be “organized by kinship networks, clan membership, and common identification with a native place or place of cohabitation.” Furthermore, this means that the society can act as a powerful socializing and coercive agent over the individual. A highly atomistic society would not meet this requirement.

Following the social order, “collective obligations” also serve to reinforce the individual’s obligation to the group—that, due to high normative pressures, the individual would not let the group down.

The last three requirements serve as a sort of social screening mechanism that is dependent on the first two factors.

Being able to judge the social and economic stability of individual actors is crucial for developing trust in the interactions. Members of a Rosca, for example, would not want to be sharing money with someone with a questionable history of monetary decisions; due to high integration of community members, this information would be known.

The isolation factor is an ecological view of the community in that if the community is relatively isolated from other communities the community members will be (and will remain) highly integrated into the group. If an individual is “stuck” in a community, the costs of losing trust or standing in the community is much higher.

The concern of similar social status is that of any individual higher in social status than that of most members of the group being able to dominate the group. Such domination would undermine the other characteristics of the group that make it work.

These findings should aid in decision making when determining future microfinance or other development efforts. No simple injections of money or creations of microfinance programs will lead to development necessarily. The local community must be appropriate for and ready to receive aid.

See Biggart’s paper here.

Read Full Post »

Information on the implications of UC Davis Sociologist, Nicole Biggart’s paper, “Banking on Each Other: The Situational Logic of Rotating Credit and Savings Associations.”

Read Full Post »