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Promoting Institutional Innovations in Microfinance: Replicating Theories is Not Enough

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  • Tazul Islam

    (American International University-Bangladesh (AIUB))

Abstract

The wisdom in rural finance has long been that lending to and saving by the poor is doomed to failure: costs are too high, they are not creditworthy and they are not able to save. A number of success stories in microfinance industry (MFI) have changed this pessimistic assessment during the past twenty years or so. Recounting the failure of traditional financial liberalization theory in ensuring the access of the rural poor to the institutional sources of finance, this paper, taking the Grameen Bank (GB) of Bangladesh- the cradle of microfinance movement, as a case study, argues for a continuation of the support towards institutional innovation in MFIs that will help achieve the goal of ensuring the access of the rural poor to the institutional sources of finance.

Suggested Citation

  • Tazul Islam, 2008. "Promoting Institutional Innovations in Microfinance: Replicating Theories is Not Enough," AIUB Bus Econ Working Paper Series AIUB-BUS-ECON-2008-06, American International University-Bangladesh (AIUB), Office of Research and Publications (ORP), revised Feb 2008.
    • Handle: RePEc:aiu:abewps:06
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    References listed on IDEAS

    as
    1. Jonathan Morduch, 1999. "The Microfinance Promise," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1569-1614, December.
    2. Santonu Basu, 2002. "Financial Liberalization and Intervention," Books, Edward Elgar Publishing, number 2691.
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