American Offshoots: Will Microfinance Ever Really Take Root in the US?
Microfinance institutions have been compared to many things, loan sharks to saviors. But Tayyeb Shabbir, professor of finance at California State University at Dominguez Hills and a professor of finance at the Wharton addition, prefers to consider them as plants. He noted that if you take a plant from a country like Bangladesh and put it in the ground in a similar climate, it is likely to be successful. But if you uproot and replant in the colder climate, say, of Philadelphia, the plant will probably die, unless it was given special attention or a new hybrid species was created.
The same is true of microfinance institutions (MFIs) in the U.S. "It will be interesting to see how these institutions to develop highly innovative in the American context, which is very different [from their counterparts in countries developing] in terms of complexity and dynamics, "Shabbir said.
Today, the United States is home to 362 MFIs in the country - some imported and others who are here. That these institutions can thrive in the United States by providing small loans and other banking products dollars remains to be seen.With a totally different regulatory and cultural context in developing countries where MFIs have their roots, small-dollar loan for the very poor in the United States is difficult for all parties involved.
Microfinance type operations have been around the United States since the 1980s, starting with institutions, including ShoreBank in Chicago, and economic development of women in Montana that provide financial services to the poor. But it took several years after their arrival for the industry to take shape. Gradually, the regulations have been refined to improve the way community-based financial institutions operate.A turning point was in 1991 when Accion International, a pioneer of microfinance in Latin America, opened in the United States, eventually becoming the largest lender in the country with some 19 500 small business loans worth a total of more than $ 119 million in January 2010.