Microfinance, Financial Inclusion, and the Rhetoric of Reaction: The Evolution and Limitations of Microfinance in Brazil

Abstract

Several political and academic circles have considered microfinance to be an important tool to promote economic development and the reduction of poverty. It became a worldwide phenomenon, and the practice disseminated in many developing countries such as Brazil. Even as many authors sing the praises of microfinance—in particular the success in developing countries—the actual experience has fallen short. The goal in this article is to provide a critical analysis of the recent practices of microfinance in Brazil. The article also presents the general characteristics of microcredit in Brazil within the context of the broader development strategy pursued, in particular since stabilization and the inception of neoliberal policies in the mid‐1990s. It is argued that microfinance plays an insidious role, making market‐friendly solutions for social problems more acceptable.

Does Financial Inclusion Diminish Poverty and Inequality? A Panel Data Analysis for Latin American Countries

“…In both countries, state mediation, especially in the late 2000s, was important to fight social issues (Campoli et al, 2020 ; Lustig et al, 2013 ). We argue other LATAM countries should invest in programs like the ones presented here, as social inclusion is necessary for a high-functioning society (Block, 2008 ), and large private banks may not be interested in providing financial services without guarantees and high fees (Schönerwald & Vernengo, 2016 ).…”

“…Amidst the multitude of factors influencing these issues, the access and usage of financial services have gained the attention of scholars and policymakers. Hence, 'financial inclusion' became an axiom within the literature (Schönerwald & Vernengo, 2016 ). Yet, the current position that financial inclusion has on the international debate on social problems is not accidental.…”

Evaluating the Sustainability of Microfinance Institutions Considering Macro-Environmental Factors: A Cross-Country Study

“…Zegarra and Wilson [37] found that increases in the size of MFIs can effectively promote their growth. In addition, there are many other factors, such as institution [38], capital structure [39], choice of loan methods [40], age [41], cost [42], efficiency [24], financial inclusion [43], and information technology [23].…”

Financial Sustainability of Microfinance Institutions and Macroeconomic Factors: A Case of South Asia

“…Thus, it is quite challenging to determine the financial sustainability of MFIs in the increasingly complex macroeconomic environment. To the best of our knowledge, the majority of the prior studies have evaluated the financial sustainability of MFIs to institutional and governance factors (Gupta & Mirchandani, 2019; Kauffman & Riggins, 2012; Sainz-Fernandez et al, 2018; Schönerwald & Vernengo, 2016). There are quite a few studies that have investigated the financial sustainability of MFIs in the macroeconomic context along with institutional and governance factors (Ahlin et al, 2011; Awaworyi, 2019; Imai et al, 2011; Vanroose, 2007; Xu et al, 2016, 2019).…”