Mongolia: A Microfinance Test Case
S. Adam Cardais - East of Center – Thursday June 28, 2012 (originally published June 21)
Rural MONGOLIA: Mongolia’s economy grew 17.3 percent last year thanks to a mining boom, and the government is set to distribute to the public some $1 billion to share the wealth. So it’s easy to forget that, Mongolia’s meteoric economy notwithstanding, 30 percent of the population is impoverished.
Against this backdrop, the European Bank for Reconstruction and Development (EBRD) launched a project in 40 Mongolian villages from 2008-2009 to assess the impact of business startup microcredit lending. Does it reduce poverty? And which loan structure is best?
The second question is key because the microfinance industry is in transition, shifting from the group loans pioneered by Grameen Bank to individual lending. In a group loan, the borrowers are liable for each other’s payments, meaning that everyone goes into default if one member doesn’t repay. This, naturally, can be very problematic. . .
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