MFI efficiency and State intervention – what correlation?

(Empirical analysis of the two main strategic French microcredit models - used in this paper as analytical grids for the ongoing debates about microfinance in the South)

Benoît Granger, Stefanie Lämmerman, June 2009

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Summary :

The purpose of this paper is to describe the two very different models of microfinance (MF) that are developing in France; and subsequently to try to underline common questions with the current debates regarding MF in Southern countries.

The comparisons with Southern MF are impossible, because the local conditions are profoundly different. However the questions about efficiency and the links between public intervention and the social impact of MF are relevant.

Of course, the main differences between these two situations, in France and in “the South”, make comparing MF development conditions impossible. Wealth in the countries is different; as is the concept of involvement of public money in MF; even the concept of the aims of MF differs; and finally, the concept of entrepreneurship as a model.

But the questions that arise now, after scandals like Compartamos, are probably not so different. Beginning with this one: Are “free market laws” able to share wealth created by the entrepreneur, between the entrepreneur and the lender? Does this relationship need an arbitrator?