Doctoral Dissertation Reseach: Creditable Lives: Microfinance, Development and Financial Risk in India

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Brown University doctoral student Sohini Kar, supervised by Dr. Lina Fruzzetti, will undertake anthropological research on how microfinance institutions (MFIs) assess financial risk and its consequences for urban poor borrowers. Proponents of microfinance have argued that access to credit mitigates socio-economic disparities by incorporating the poor into more efficient markets. Paradoxically, the sustainability of MFIs requires the exclusion of those who fail to meet the risk criteria employed by bank staff. This project will investigate how borrowers and lenders of microfinance negotiate this tension between "financial inclusion" and social exclusions informed by global financial norms and locally constituted ideas of creditability. This research will be conducted in Kolkata (formerly Calcutta), India, which was identified by the Indian government as having a significant financially excluded population, and has consequently had a rapid proliferation of MFIs. As many of the MFIs lend exclusively to women, this project will focus on women borrowers, and will pay close attention to how microfinance affects gender relations. The research objectives of this project are 1) to understand how MFIs determine their ideal borrowers, 2) how this risk assessment affects borrowers and those who are excluded, and 3) whether access to credit addresses social inequalities. The researcher will employ qualitative research methods, including participant-observation of borrower group meetings and MFI offices, interviews with key actors in the banking sector as well as women borrowers and their families, and media and policy analysis of microfinance in India. This research is important in understanding the effects of the rapidly growing microfinance sector globally. The findings will contribute to understanding the challenges of enfolding of the poor into financial networks and its development policy implications. This research also supports the education of a social scientist.