MICROFINANCE, COMMERCIALISATION AND ETHICS

This paper discusses the so-called commercial approach to microfinance undereconomic and ethical aspects. It first shows how microfinance has developed from a purelywelfare-oriented activity to a commercially relevant line of banking business. Thebackground of this stunning success is the almost universal adoption of the commercialapproach to microfinance in the course of the last decade. The author argues that thiscommercial approach is the only sound approach to adopt if microfinance is to have anysocial and developmental impact. Therefore, the widespread “moralistic” criticism of thecommercial approach, which was again and again expressed in the 1990s, is ill-placed froman economic and an ethical perspective.However, some recent events in microfinance raise doubts as to whether thecommercial approach has not, in a number of cases, gone too far. The evident example forsuch a development is Compartamos, the Mexican microfinance institution which recentlyundertook a financially extremely successful IPO. As it seems, some microfinanceinstitutions have become so radically commercial that the social and developmentconsiderations, which traditionally motivated microfinance, seem to have lost theirimportance.[...]