The Failure of Microfinance to Reduce Poverty: Critical Secondary Analysis of the Case of Bangladesh

Sara Karoliina Pietiläinen

Student thesis: Master thesis

Abstract

Microfinance has been widely criticised in academia regarding its claimed impact on reducing poverty. However, most studies have failed to consider the foundation of microfinance on neoliberal and capitalist ideas stemming from mainstream economic thought, which are based on moral judgement and made to serve class interests. Basing on critical realist philosophy of science, using secondary ethnographic data along with statistics, and drawing on neo-Marxist and post-development literature this study analyses the underlying reasons behind the inherent failure of microfinance to help the borrowers in Bangladesh. The study concludes that microfinance is a means of class oppression, accumulation of capital at the expense of the borrowers, destructing their cultural and traditional ideas and ways of life, and strengthening the power of the financial elites, which can only result in further inequality and poverty for the majority of the borrowers. Thus, the provision of microfinance ought to be ceased even when considering the argument of financial inclusion through microfinance.

EducationsMSc in International Business and Politics, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2019
Number of pages90
SupervisorsDaniel Souleles