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Making Microcredit Work for Recipients
We are building new ways to improve poverty alleviation strategies, especially microcredit, from the perspective of the poor.

The current debate about the efficacy of microfinance is marked by the absence of those who have most at stake in the controversy: loan recipients. The Goldin Institute is working to lift up these voices, most often marginalized women, and restore their perspectives, insights and aspirations to the discussion.

Through the Goldin Institute’s pioneering work on Community-Based Oral Testimony in Bangladesh, we are building new ways to improve poverty alleviation strategies, especially microcredit, from the perspective of the poor.

  • 12
    The Goldin Institute trained a team of twelve community researchers in oral testimony techniques.
  • 150
    The research team conducted over 150 interviews with peer microcredit recipients in Arampur.
  • 8
    This village of 1500 households now has eight microcredit banks leading to an oversaturated debt market.
  • 3+
    The majority of households surveyed now hold three or more microcredit loans and feel entrapped by debt.

Over-saturation of microcredit banks has led to dependency on microcredit for consumption and other non-entrepreneurial purposes in rural Bangladesh. Many household reported holding upwards of four loans at a time. In this overcrowded debt-market, it is common to cover old debts by taking out new loans from different sources (and not infrequently from the same sources), often with the encouragement of field officers.

How to Improve Microcredit?
  • New Metrics
    High repayment rates prove that microcredit works for banks but tells us nothing about its efficacy for borrowers.
  • Balanced Approach
    Without access to complementary services, recipients are often forced to use their loans to address immediate needs.
  • Listen to Recipients
    Listening to the insights of recipients ensures that microcredit empowers, rather than exploits, borrowers.

RESOURCES

Listening to Microcredit Recipients: Video of the “Listening to the Experiences of Microcredit Recipients” roundtable discussion hosted on June 21, 2010 in Dhaka, Bangladesh. This is the first ever conversation between microcredit lenders, regulators and recipients in Bangaldesh.