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This article derives from field research carried out in 1992–93, funded by an ODA ESCOR grant. The research was part of the wider project on finance for low income groups administered by the Institute for Development Policy and Management, Manchester, undertaken in collaboration with David Hulme, Paul Mosley, Debapriya Bhattacharya and Graeme Buckley. Thanks are also due to Dinal Femando and Tamana Siddique, who were my interpreters in Sri Lanka and Bangladesh respectively.
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Research Article
Disciplining or protecting the poor? Avoiding the social costs of peer pressure in micro-credit schemes†
Article first published online: 4 DEC 1998
DOI: 10.1002/(SICI)1099-1328(199603)8:2<289::AID-JID368>3.0.CO;2-2
Copyright © 1996 John Wiley & Sons, Ltd.
Additional Information
How to Cite
Montgomery, R. (1996), Disciplining or protecting the poor? Avoiding the social costs of peer pressure in micro-credit schemes. Journal of International Development, 8: 289–305. doi: 10.1002/(SICI)1099-1328(199603)8:2<289::AID-JID368>3.0.CO;2-2
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Publication History
- Issue published online: 4 DEC 1998
- Article first published online: 4 DEC 1998
Funded by
- ODA ESCOR
- Abstract
- References
- Cited By
Abstract
This paper utilizes case studies from Bangladesh and Sri Lanka to explore a disadvantage of group lending schemes: the unnecessary social costs of repayment pressure. The author argues that extending credit and meeting the needs of the poor need not be incompatible. The poor can be protected from socially damaging peer pressure lending practices via flexible repayment schedules, savings facilities and short-term, high-interest consumption loans. The analysis suggests protectional devices for poor borrowers, better staff performance indicators, and self-management of some resources by the poor.