by Elizabeth Tharakan
Repository Citation
Elizabeth Tharakan POPULAR MEDIA AND PROFITABLE MICROFINANCE IN INDIA Fall 2024 Int’l J. L. Ethics Tech. 4 (2024). Available at: https://www.doi.org/10.55574/CXMO4691
Author Information: Southern Illinois University Carbondale, US.
Abstract:
Microfinance is a mechanism of providing financial assistance to those who cannot access traditional banking because they are too poor. The assistance is in the form of small loans of an average size around $200. Available data indicates that there are close to 3,500 microfinance institutions (MFIs) reaching out to 130 million clients. The worldwide majority of MFIs target women as their main clients. Most of them are able to maintain a high loan repayment rate of 95-100 per cent, creating a buzz in popular media like the Wall Street Journal with companies like Kiva Loans. This paper explores the extent to which favorable media coverage of microfinance affects the profits of MFIs in the context of India, one of the largest microfinance markets globally. With any sudden turn of events – any untoward incident – that makes media coverage of microfinance unfavorable, the flow of international investments to MFIs would decline consequently reducing their financial profitability. We examined the effect of one such “untoward incident,” the Andhra Pradesh (AP) microfinance crisis of 2010, which turned some coverage for microfinance hostile. We chose this crisis because it occurred after the honeymoon period when the Grameen Bank and Muhammad Yunus won the 2006 Nobel Peace Prize, when a flurry of bad press about microfinance started appearing in international media. Thus, this crisis marks a natural break in favorability of media coverage. Feminist policies encouraged by development economists throughout academic institutions and universities recommend making loans to women because women are likely to use their money responsibly by investing in their businesses and feeding their families rather than wasting their money on alcohol and tobacco. This unwavering faith in women is essentially feminism. We can define feminist policies as those rules, incentives, and regulations that encourage women to be financially literate and financially independent of their families and spouses, which can often lead to a better economy. These feminist policies represent a change for Indian society, which is composed generally of patriarchal economic systems where men are heads of their households and breadwinners. In this paper, we employ a natural experiment design based on a first difference analysis to analyze change in profitability of microfinance institutions in India due to the crisis in AP that resulted in media coverage of microfinance turning unfavorable. Since these effects could vary depending on the ideology of the media outlets, we chose to include multiple newspapers of different political ideologies published from within India and outside in order to examine the relationship between media coverage of microfinance and profitability of the institution. Ultimately, we found that media coverage of microfinance did not impact profitability of microfinance institutions, which surprised us because we thought that feminist policies would drive global recognition and investment. This surprise stems from the fact that microfinance investors are generally banks, not the global public.
Keywords: Microfinance; Economics; Development; Global South; Bank
Tables of contents
Attribution 4.0 International (CC BY 4.0)
Persistent link: https://www.ijlet.org/2024-4-183-197-2/
DOI: https://www.doi.org/10.55574/CXMO4691
Full-text PDF article