Publication
Title
Crisis in Nicaraguan microfinance : between the scylla of business for profit and the charybdis of clientelism
Author
Abstract
From being a poster child of microfinance development, Nicaragua became one of the nightmares for the industry. The negative influence on the countries‟ repayment culture of the Non-Payment Movement, ambiguously related to the new Sandinista government, is typically blamed for the crisis. A closer analysis, however, reveals that features of the mainstream microfinance policies in Nicaragua are possibly more to blame for the crisis than the political turmoil, which opportunistically seems to have taken advantage of the underlying problems. Overfunding of regulated MFI-banks and promotion of excessive competition, in particular of these banks with the non-regulated MFIs, led to reckless lending and created over-indebtedness. Gradual professionalization and conventionalization also led to the erosion of social embeddedness once at the core of the Microfinance revolution- and left MFI weak in the face of political challenges. And the obsession with profitability and finance only‟ implied higher interest rates and left many poorer clients with little or negative impact, lending credibility to the accusation of usury. While the Non-Payment Movement could be understood as a Polanyian countermovement to the problems created by market development, its ultimate political objectives however seem to offer only dubious perspectives for future inclusive economic development.
Language
English
Source (series)
IOB working paper ; 2011:04
Publication
Antwerp : UA, IOB, 2011
Volume/pages
30 p.
Full text (open access)
UAntwerpen
Faculty/Department
Research group
Publication type
Subject
Affiliation
Publications with a UAntwerp address
External links
Record
Identification
Creation 09.06.2011
Last edited 23.12.2015
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