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Due Diligence: An impertinent inquiry into microfinance, by David Roodman

Just finished reading Roodman’s book that aims to critically assess seemingly all we know about microfinance and the myths too. The book is excellent and its writing probably overdue. Two discussions I particularly valued were first of all the review of social dynamics of group lending, and the negatives associated with this, puncturing the myth of the model’s perceived inherent democratic ways, and highlighting the consequences of veritable power inequities. Secondly, the discussion of microfinance services in terms of credit vs. saving vs. insurance confirms my belief that “the poor” would be better served with more of the latter two. Roodman reminds the reader that financial services largely allow us to do something mundane: accumulating small sums into large ones. And then have access to the large ones when you need to. He poignantly argues that providing credit is the easy way to do this, while offering functional saving and insurance services is hard, but potentially less harmful to its users. I’d agree.

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