The Andhra Pradesh Microfinance Crisis and American Payday Lending: Two Studies in Vulnerability
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Author(s)
Palmer, Eric
Date Issued
June 1, 2013
Abstract
Microcredit, a non-profit lending approach that is often championed as a source of women’s inclusion and empowerment, has in the past decade been followed by microfinance, a forprofit sibling of a different temperament. Microfinance in India is now in turmoil, precipitated by legislation in the state of Andhra Pradesh, which has encouraged withholding of payment, which in turn has frozen the market. This paper considers one precipitating condition of the crisis: the remarkable, new, and developing burden of formal economic debt that poor women in the state have only recently come to hold – debt that now surpasses one year’s family income, on average. The development of this lending sector follows upon innovation in lending to the poor of the global north over the past two decades, and the practices show noteworthy parallels. Both lending schemes have produced similar disproportionate burdens upon some low-status individuals within their respective economic orders, and both may exploit a vulnerability that is born of aspiration and produces great dysfunction for borrowers. This paper introduces the two lending schemes, sketches the parallels, and introduces the claim that ethical finance arrangements for the poor require attention to vulnerability, an under-utilized category in both liberal ethical theory and in finance.
Journal
Éthique et économique/Ethics and Economics
Department
Philosophy & Religious Studies
Citation
Palmer, Eric. 2013. "The Andhra Pradesh Microfinance Crisis and American Payday Lending: Two Studies in Vulnerability." Éthique et économique/Ethics and Economics 10, no. 2.
Publisher
Centre de recherche en éthique de l'UdeM
Version of Article
Published article
ISSN
1639-1306
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Palmer 2013 ethics.pdf
Description
Published article
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Format
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