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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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Preface. A Journey into Microfinance


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A Journey into Microfinance

This book is about my journey into microfinance. It is a journey, it is not the journey. Perhaps Nobel Laureate Muhammad Yunus’s journey was the journey. But even that was not the only journey. I am happy to have followed him into microfinance, although I did not walk in his footsteps, I did not give loans, I did not get repaid. I taught, I talked, I listened, I read and I wrote.

My journey actually started by reading the introduction of a book by Jeffrey Sachs. I was moved. It made me wonder what I was doing for the poor. Here I was teaching at the Burgundy School of Business in Dijon, France, living in the comforts of a rich country: running water, continuous electricity and very little dust. But didn’t I owe something to the people who had educated me in the most elite of institutions: St. Columba’s High School, St. Stephen’s College, IIM Calcutta and Delhi University? There, I had met faculty who would stimulate my mind with their reasoning. Yet, I had been too young for that reasoning to touch my heart. Now, my heart was open and could be touched by Sachs’ introduction.

My motivation got reinforced by meeting Marc Labie who seemed to be a rare academic with a happy smile and time to be a gentleman. He was researching microfinance and we met at a governance conference. I...

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