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CM SU85 - Microfinance and Development (intensive)

Faculty
Ron Severson, University of Oregon

Course Coordinator
ISUP Secretariat

Prerequisite/progression of the course

Students are expected to be proficient in English and to have strong interests in finance or economics, development, and poverty reduction.

Course content, structure and teaching

This course introduces students to the history, theory, and practice of microfinance. Historical dimensions trace the rise of microfinance within informal economies and in the work of Muhammad Yunus and the Grameen Bank. Theoretical dimensions consider microfinance as both an extension of and a critique of liberal economic thought as applied to financial markets. Practical dimensions relate the variety of microfinance institutions, loan models, and services to variations in particular contexts for development and to the objectives of program designers. The course also engages case studies and considers future directions of microfinance. Throughout the course, emphasis will be placed on identifying and measuring financial, social, and environmental outcomes of microfinance programs when these programs intervene in credit markets to alleviate poverty.

Course topics will include:

  • Conditions of poverty and financial responses to those conditions
  • Formal and informal financial markets
  • History of microfinance and the emergence of social entrepreneurship
  • Microfinance and liberal economic thought
  • Case studies, contextual factors, and variation in microfinance models
  • Development indexes and measures of financial, social, and environmental outcomes
  • Issues related to program design within particular contexts for particular purposes
  • Ways to improve governance and accountability
  • Critiques of the microfinance industry and responses
  • The future of microfinance organizations, products, and services
The course's development of personal competences

Students who take this course will gain the knowledge, insight, and analytical abilities to evaluate the effectiveness of microfinance programs, to design programs, and to improve products and services. They will also gain the ability to know when and how to use microfinance as a form of financial intermediation to help eliminate poverty, empower persons, and sustain the environment while achieving financial sustainability of organizations. Finally, students will strengthen their competencies to speak, listen, research, think critically, write, and participate in intercultural dialogues on important issues related to microfinance and development.

Learning Objectives

At the end of the course students will be able to:

  • Understand the history of microfinance and analyze its relations to liberal economic theory
  • Apply knowledge of the field to a variety of economic and cultural contexts
  • Identify problems with microfinance and recommend solutions within particular contexts
  • Evaluate approaches to identifying and measuring financial, social, and environmental outcomes
  • Design a microfinance program to achieve particular outcomes within a particular context
  • Understand and respond to critiques of microfinance
  • Envision future directions of microfinance within the broader financial services industry
  • Conduct quality research in the field of microfinance
Teaching methods

This course will be taught as an intensive seminar involving lecture, discussion, case analysis, dialogue, small group presentations based on regional interests, and individual research projects.

Examination

Final exam: Project/home assignment (written individually), 15 A4 pages.

Re-take exam: Project/home assignment (written individually), 15 A4 pages.

Recommended literature

Books:

Yunus, Muhammad. Banker to the Poor: Micro-Lending and the Battle against World Poverty. PublicAffairs, 2003. (ISBN: 978-1-58648-198-8) 288 pages

Collins, Daryl, Jonathan Morduch, Stuart Rutherford, and Orlanda Ruthven. Portfolios of the Poor: How the World’s Poor Live on $2 a day. Princeton University Press, 2009

Articles:

(Note: Articles will be divided among group members. Each group member will read and summarize a minimum of 4 articles and present their critical summaries to their group to develop shared resources and collective intelligence.)

Banerjee, Abhijit, and Esther Duflo. "The Economic Lives of the Poor. "The Journal of Economic Perspectives 21, no. 1 (Winter, 2007): 141-167.

Sengupta, Rajdeep. “The Microfinance Revolution: An Overview. “ Federal Reserve Bank of St. Louis Review, 2008.

Cull, Robert. “Microfinance Meets the Market.” Journal of Economic Perspectives, 2009.

Gutierrez-Nieto, Begona. “Factors Explaining the Rating of Microfinance Institutions.” Nonprofit and Voluntary Sector Quarterly, 2007.

Copestake, James. “Social Performance Management or Mission Drift?” World Development, 2007.

Mendoza, Ronald, and Nina Thelen. “Innovations to Make Markets More Inclusive for the Poor.” Development Policy Review, 2008.

Abbink, Klaus, and Elke Renner. “Interest Rates in Group Lending: A Behavioral Investigation.” Pacific Economic Review, 2006.

Karlan, Dean. “Credit Elasticities in Less Developed Economies: Implications for Microfinance.” American Economic Review, 2008

Hatch, John. “Expanding Microfinance Services to Young Adults.” Monograph from The Trickle-Up Program Symposium, 2004

Donahue, Jill, Evelyn Stark, and Joan Hall. “Microfinance, Youth, and Conflict: Central Uganda Case Study.” USAID, 2006

Frishanko, Veronica and Dean Karlan. “Business Training for Microfinance Clients. How it Matters and for Whom?” PMMA Working Paper, 2008.

Sievers, Marten. “Synergies through Linkages: Who Benefits from Linking Micro-Finance and Business Development Services?” World Development, 2007

Shakya, Yogendra and Katharin Rankin. “The Politics of Subversion in Development Practice: An Exploration of Microfinance in Nepal and Vietnam.” Journal of Development Studies, 2008

Karim, Lamia. “Demystifying Microcredit: The Grameen Bank, NGO’s, and Neoliberalism in Bangladesh.” Cultural Dynamics, 2008

Karnani, Aneel. “Employment, Not Microfinance, Is the Solution.” Journal of Corporate Citizenship, 2008.

Rankin, Katharine. “Social Capital, Microfinance, and the Politics of Economics.” Feminist Economics, 2002

Select chapters from: Armeddariz, Beatriz and Jonathan Morduch. The Economics of Microfinance. MIT Press, 2005.

Suggested Readings

Rutherford, Stuart. The Poor and Their Money. Oxford University Press, 2001.

Yunus, Muhammad. Creating a World Without Poverty: Social Business and the Future of Capitalism. PublicAffairs, 2007. (ISBN: 1-58648-493-1) 248 pages.

Clark, David Alexander. Visions of Development: A Study of Human Values. Edward Elgar, 2002. (ISBN: 1840649828) 282 pages.

Other

Classes will be held from Monday-Thursday for a total of 30 hours for the first three weeks of the program. A project/home assignment will be given for the last three weeks. The hand in deadline for the project/home assignment will be in the last week of the program.


Sidst opdateret af ISUP Secretariat 28.01.2010