Topics in Social Economics
Friday, Jan. 4, 2019 12:30 PM - 2:15 PM
- Chair: Nathanael Ojong, Tyndale University College
Culture and Financial Capitalism: Insights from Cameroon
AbstractThis paper uses an approach grounded in institutional political economy and critical theory to explain the operations of the microfinance industry in Cameroon. As finance is critical to neoliberal-led development, I argue that it is important to examine the role that culture plays in mediating access to credit provided by microfinance institutions. This is critical, as economic theory does not accurately depict the vital role of culture in facilitating access to credit. I contend that by facilitating access to finance at the local level, traditional institutions serve to legitimate and consolidate the activities of microfinance institutions that benefit from finance-led development. I also argue that culture serves as a channel that enables poor people previously unconnected to the formal financial system to become part of global financial capitalism, which does not necessarily make them better off. The local culture has become one of the methods of surplus appropriation.
Too Many Cooks Spoil the Broth: The Conflicting Impacts of Subsidies and Deposits on the Cost-Efficiency of Microfinance Institutions
AbstractThe costs and benefits of subsidized microfinance are still a controversial topic. We evaluate how subsidies affect the cost-efficiency of microfinance institutions (MFIs). At the same time, we account for endogenous self-selection into the business models of credit-only versus credit-plus-deposit MFIs. Our findings draw a contrasting picture. First, they suggest that unsubsidized credit-plus-deposit MFIs have achieved optimal capacity and therefore constitute the most cost-efficient group of institutions in our sample. Second, the unsubsidized credit-only MFIs are the farthest away from their minimum cost. Between the two polar cases, there are subsidized institutions, among which the credit-only ones are closer to optimal capacity. Our results reveal the redundancy between subsidization and deposit-taking in microfinance. In conclusion, combining funds from donors and depositors tends to harm cost-efficiency.
Economic Goals, Social Goals and Non-Mechanistic Policies
AbstractAfter a brief outline of the mainstream, this paper focuses on the heterodox view of the economy, which encompasses a variety of schools of thought within an open systems approach. They all assume that the goals of the economy are determined by a historically determined structure but they can be divided into three strands.
The first strand focuses on the intrinsic inability of the economy to achieve its goals automatically, so that policy is a crucial means to stabilize and direct it. The second strand points to the inconsistency between these economic goals and social ones. Pursuit of the latter may preclude the proper functioning of the economy not because of “mechanical” reasons but because of political and institutional constraints. Public policy must reconcile the two types of goals or proceed according to a chosen priority. The third strand assumes that, despite historical constraints, the economy may actually be structured according to social goals, thereby overcoming, in principle, the above inconsistency with economic ones. Since society is not homogeneous, however, the role of policy is to select the social goals - thus the economy – that should prevail.
The conclusions stress how the discriminating factor in these distinctions is the assumed degree of openness of the economy. The greater it is the more scope for change it warrants. A higher degree, however, increases systemic complexity and makes it more difficult to provide an abstract outline of how to proceed.
- Z1 - Cultural Economics; Economic Sociology; Economic Anthropology