Paper
The Big-Country Enigma
Why has microfinance fared badly in large countries?
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This paper explores the reasons for the inferior performance of microfinance in large economies such as Brazil, Argentina, Mexico, India, and Nigeria. The author identifies the following retarding factors in Brazil:
- High inflation leading to high interest rates unsuitable for small borrowers;
- Late arrival of microlending in Brazil;
- Unsuitable legal environment;
- Low levels of foreign assistance.
The paper states that subsidy driven government credit programs may have slowed the growth of microcredit in India. In Mexico, discouraging of independent activism prevented microfinance programs of NGOs from scaling up.
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