Resurgence of an Ancient Idea? A Study on the History of Microfinance

Abstract

Microfinance revolution, as it was frequently called, did not happen overnight. Microfinance has a long history of evolution, from a simple idea to a global movement, through which it came into the present shape. But much of its history is yet to be written systematically. In fact, there is no historical research so far from the perspective of microfinance. Little is thus known about the early history of some of the oldest forms of lending to the poor. The current study offers a historical look at microfinance and aims at documenting the evolution of modern microfinance institutions. The object of the research is to recognize the historical depth of microfinance and give a picture of how this idea emerged and developed overtime. The study reveals that moneylending to the poor was always in existence in various forms in different periods of time in both developing and developed countries. It has a long history, particularly in Asia but also in Africa and Europe.

Is Loan Shark an Alternative? The Intentions to Take a Loan from Loan Sharks in Indonesia

“…Providing loan services for the poor community always exists from time to time in developed and developing countries (Zainuddin & Yasin, 2020). Loan sharks grow in developing countries such as ASEAN countries (Musari, 2020).…”

The role of national culture in the relationship between microfinance outreach and sustainability: a correlated random effects approach

“…This finding however contradicts with the result of Manos and Tsytrinbaum (2014) who maintain that, in strong uncertainty avoiding countries, people prefer bank-based systems and the higher bank penetration rates increase the competition between banks and MFIs that ultimately deteriorates the microlenders' financial performance. But the history of microfinance reveals that the competitors of MFIs are not conventional banks, rather different traditional sources of credit, such as moneylenders and local credit associations (Zainuddin and Yasin, 2020b). In financial matters, poor people in high UAI countries would put their trust more on microfinance institutions than any local source of finance, because of their high preference for security and stability (Kwok and Tadesse, 2006).…”

Financial management practices, competitive advantage and loan performance of selected microfinance institutions (MFIs) in Ghana

“…MFIs are often regarded as one of the most effective strategies for addressing economic inequality in less developed countries, and they have achieved this by extending credit and loans to underserved regions in developing nations like Ghana (Miled et al, 2022). Zainuddin & Yasin (2020) emphasized that the efficiency of MFIs in lending can be projected by evaluating their competitive advantage and financial planning strategies. Despite the positive impact of MFIs on Ghana's economy, their recent struggles in financial management have been identified as a hindrance to their long-term sustainability (Miled et al, 2022).…”

“…Zainuddin & Yasin (2020) emphasized that the efficiency of MFIs in lending can be projected by evaluating their competitive advantage and financial planning strategies. Despite the positive impact of MFIs on Ghana's economy, their recent struggles in financial management have been identified as a hindrance to their long‐term sustainability (Miled et al, 2022).…”

“…Strategies like target costing, differentiation, and offering economic or distinct advantages in a specialized market are fundamental for gaining a competitive edge. In the case of MFIs, their competitive edge might stem from being recognized as cost‐effective leaders compared to other banking services, given their focus on serving economically disadvantaged clients (Zainuddin & Yasin, 2020).…”