Replicating Microfinance in a Developed Country

Ester Barinaga, Professor, Copenhagen Business School

Microfinance is a financial technique initiated in the developing countries as a tool to help people get out of extreme poverty. Professor studied what happens when you translate such a social innovation - microfinance from the developing world to a world, or to such a different context as Sweden. She followed the effort to introduce microfinance to a developed welfare state, such as Sweden, where you don't have a lack of financial infrastructure.

We may think of a social problem as identical in different national contexts, and it's not. Poverty in India or Bangladesh is one thing. Exclusion and poverty in a welfare state like Sweden is quite a different thing. And to believe, to have the illusion that we're going to be able to use the same social innovation to address poverty in both places. It might be an illusion. Whereas in India or Bangladesh, it might be a matter of lack of material access to financial networks. In Sweden it's not a problem of lack of material access to financial networks. In Sweden it's a cultural problem. And so microfinance is addressing the material aspects of a social problem. Whereas, the root of that problem might be as much cultural and ideological as they are material.

This blog post is based on my learnings from the course on ‘social entrepreneurship’ offered by Copenhagen Business School through Coursera (2014).