A New York Times news analysis of “microcredit” in Bangladesh subtly debunks the main myths of the movement: 1) that micro-lenders have discovered entrepreneurial opportunities that regular banks and financial institutions have overlooked because of a bias against the poor, 2) that microlending is a market-sustained sector as versus one massively subsidized by governments and non-profits, and 3) that microlending has proven to be an unmitigated success. Choice passages: “Since 1988, the United States Congress has appropriated $2 billion for such programs”; “But there are still no stringent evaluations of microcredit programs generally viewed as credible by experts”; “the World Bank, the largest provider of microfinance funds…”
The greatest myth of the movement is the idea that conventional banks have overlooked massive profit opportunities that would otherwise present themselves from lending to the very poor in the developing world. Even after a decade of unrelenting propaganda about the glories of microcredit, we are supposed to believe that conventional banks still don’t get it: there are profits to be had but the big banks just won’t touch them.
The most overlooked aspect of the movement is its coercive element as seen in the 16 Decisions that the Grameen Bank imposes on its borrowers. Looks Maoist to me. More on this here. A google of doubts about microcredit turns up many revealing comments.