Agricultural Research Management Information System

Home
Research Summary
Search
About Us
- ARMIS
- Brochure
Contact Us
Report
User Request
Data Input
Help
- Operation Manual
  - PDF
  - Video
- Program Area & Commodity
We have reached 37600 number of research entries at this moment.

- Logout

Research Detail

Home
Research
Detail

Microfinance : Social Entrepreneurship and Social Consciousness-driven Capitalism?

Khandakar Qudrat-I Elahi
Part-time Faculty
Part-time Faculty. Department of Economics and Social Science, BRAC University, Dhaka, Bangladesh

M. Zahirul Islam
Senior Economist
Senior Economist, Ontario Ministry of Agriculture and Food, Guelph, Ontario, Canada.

Abstract/ Executive Summary:

Micro finance, a recently coined vocabulary in rural finance literature, refers to small-loan commercial banking facilities created specifically for meeting the financial needs of the poor. This financing program is different from the traditional micro credit program in that the former has profit motives, while the latter being non-profit NGOs, do not. Because of this commercial feature, micro finance programs are susceptible to criticism. To undermine the severity of this criticism, suggestions are being made to treat them as social-consciousness driven capitalist ventures and their owners as social entrepreneurs. This paper investigated this overwhelming proposition, particularly in the light of Adam Smith's moral and economic theories. The analysis seems to suggest that the proposition has difficulties both from theoretical and policy-making perspectives.

Keywords: Microfinance,Social entrepreneurship, Capitalism

Location:

Start Date:

End Date:

Program Area: Socio-economic and Policy

Non-commodity: Market analysis

Objectives:

To examine the new rural finance theory

Methodology:

The micro finance literature accuses the neoclassical production theory as inadequate to address the TW's pervasive poverty problems, because it mainly investigates the `causes of the wealth of nations, not the causes of poverty'. Since concepts, institutions, legislation and public policies are developed based on this theory, it creates mindsets that disfavors the poor. In particular, the neoclassical production theory is founded upon three economic fallacies: (a) credit is a neutral economic tool, (b) entrepreneurs constitute a specially gifted group of people and (c) capitalism concerns exclusively of profit maximization. Because of these controversial premises, the neoclassical production theory provides only half-truth about the reality of production function in a capitalist economy, particular the TW. There are individuals in society who would like to undertake production activities with due considerations of the welfare of their customers. In other words, it seems perfectly possible to develop capitalist enterprises that would maximize private profits subject to the fair interests of their consumers. More specifically, social entrepreneurs and social consciousness- driven capitalism are the new ideas that should guide the formulation of both theory and policy for the reduction of poverty in the TW countries.

Source of Information: Bangladesh J. Agric. Econs XXVI, 1 & 2(2003) 71-86

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

It concludes that the very idea of social entrepreneurship is critically controversial: Whether capitalist production function can be developed based on the `fellow feeling' feature of humankind, is being debated in economic literature shortly after Adam Smith published his books on moral and economic theories. Beside this theoretical controversy, there are practical issues involved in formulating development policies based on this proposition. Unlike theory, which is basically concerned with explaining and predicting relations among ideas or variables, policy refers to actions to be undertaken to achieve certain objectives. Since the international donor community is supposed to supply funds for the development of the micro finance institutions, it must know how to distinguish between social entrepreneurs and non-social entrepreneurs. Yet, the proponents of social entrepreneurship in capitalism suggest no theoretical or practical mechanism by which two groups can be distinguished with some degree of objectivity. Consequently, there are reasons to apprehend that, instead of solving the TW's pervasive poverty problems, the promotion of micro finance institutions might further complicates them.

Knowledge Management: Journal