The Ethical Crisis in Microfinance: Issues, Findings, and Implications

Abstract

ABSTRACT:Microfinance is often assumed to be an ethically progressive industry, but in recent years it has been the target of much ethical criticism. Microfinance institutions have been accused of using exploitative lending techniques and charging usurious interest rates; and critics even question the ability of microfinance to alleviate poverty. This article reviews recent research on the microfinance sector that addresses these ethical issues. We show how this research is relevant to a number of theoretical issues, such as how to define poverty, how to understand exploitation, and how to balance financial and social goals in commercial organizations. We conclude by identifying a critical agenda for future research.