Microfinance, the Market and Political Development in the Internet Age

This article steps outside traditional economic analysis of microfinance, and instead investigates the political ramifications of microfinance in developing countries. In particular, I argue that microfinance affects social capital, political empowerment and democratisation. I examine three emerging trends in microfinance: new technology; the rise of for-profit microfinance institutions; and the increase in individual, rather than group microfinance lending. In exploring these trends, I analyse seven prominent institutions: non-profits Kiva, Global Giving, Calvert Organization and MicroCredit Enterprises; and for-profits MicroPlace, MicroVest, and Oikocredit. My findings indicate that different types of microfinance institutions have unique characteristics that influence political development in a variety of ways, including but not limited to: democratisation, social capital, and economic and political empowerment. The article attempts to fill a gap in the literature and open up a conversation as to how differing approaches to microfinance lending influence political development.