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Battling a Wicked Problem


Arvind Ashta

A school of thought hails microcredit as a social innovation, a messiah to enable people to help themselves out of poverty through entrepreneurship. An opposing school of thought considers microcredit as a capitalist demon ensnaring the poor in poverty and debt. The layman and the million professionals working in this industry are at a loss to make sense of the stories that circulate about microcredit. This book provides this sense-making, useful for students, professionals, investors and researchers who are attracted to this field.

Poverty is a wicked problem, akin to Hydra, the Greek mythological monster with many heads. As microcredit tries to balance multiple objectives to grapple with these multiple heads, it has needed to shift the weapons it uses. The arsenal for this battle has needed new philosophies, changing ethics, differing missions, institutional partnerships, the latest technologies and new products. These rapid innovations have differed in speed across the world, with adaptations in developed and developing countries. This book presents these with many case studies and field research.

It is clear that development initiatives, no matter how financial, cross academic disciplines. At the very least, they affect disciplines such as economics, business management, sociology, history, geography, politics, legal systems in place, as well as science, which is evolving at such a high speed. The book provides this multidisciplinary view and motivates future research and practices.

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Foreword. The Controversial Universe of Microfinance


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The Controversial Universe of Microfinance


Professor of Political Economy

Microfinance is part of the universe of solidarity finance. Solidarity finance denotes a financial behavior that recognizes that money is not the master, but the instrument. This financial sphere includes microcredit and guarantee offers, micro insurance and mobilization of solidarity savings schemes. It responds to four major funding assignments: for environmental activities, for access to housing, for international solidarity, and for the entrepreneur who creates or strengthens employment in a logic of social and geographical proximity with a small business. In the latter case, it is – for the actors of solidarity finance – not only to finance the entrepreneur, but also to support him by providing advice and joint guarantees. The solidarity financer apprehends the entrepreneur-individual as an anchored player in his local environment (social and geographical) and offers him support and adequate funding for his economic and social needs. As such, he is not only within a contractual “financer-funded” relationship, but also one where consolidation and enrichment of knowledge, technical knowhow and interpersonal skills will make the beneficiary a socially responsible entrepreneur at the head of a sustainable entrepreneurial organization.

This book of Arvind Ashta stands as an itinerary into this complex world of study and research on the particular field of microfinance, referring to a world where the largest number of poor households can have permanent access to a range of financial services tailored...

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