http://www.economist.com/opinion/displaystory.cfm?story_id=11622469
I'd be interested to hear more about the bank that did this - it seems to be working, but it's not a very deep article. This is the first one I've seen that's really making this profitable. Of note, of course, is the average loan size, which is $450, much higher than loan sizes in Asia. I think they were started with government money, which still presents a startup-cost barrier to other profit-seeking entities. Interesting to see how the field is developing, though...
Wimbledon Wisdom
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I recently ran across a graduation speech by the tennis great Roger
Federer. I especially appreciated this passage:
In the 1,526 singles matches I played...
1 day ago
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2 comments:
Lisa, good article. I reviewed the companies financials... but given their a lending institution and I don't really know what I am doing.. I can't say much other than that it appears they are invested in other activities as well. However, my guess is that they are using their loans as leverage to invest elsewhere.. well maybe.
My question though, as we saw in India, what types of activities are people using these loans for. Business or fixing up the house? And if its the latter, does this really have an affect on development and raising these people to another income level? I would argue no. Granted, let this company, if it really is profitable, keep doing what it is doing, but not in the guise of helping bring people out of poverty.
Any thoughts?
Even if micro-lending doesn't lead to income growth, it is a means for income smoothing. That alone could improve wellbeing. Less volatile wealth could also lead to more investment in education and healthcare (Parents who fear a crop failure, etc, might not be willing to make purchases that they otherwise would if their income stream was more predictable). The latter effect would likely increase wellbeing and longevity, as well as become a driver of long-term economic growth.
The bottomline is, absent predatory lending, why would you want to deny two adults the ability to engage in a voluntary transaction? The fact that individuals are willing to take these loans is a clear indicator that it provides a utility gain. Profits will allow this type of lending to be more sustainable and available. If there is a charitable source of lending, then it will drive these for-profits out of business. If not, then they are providing a valuable service.
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