David Roodman's Microfinance Open Book Blog

In my writing now, I am sorting through lines of thought on how microlender behavior enhances or reduces the freedom of poor borrowers---freedom in Amartya Sen's definition, as agency in one's own life. The oldest strand here is that of "usury," the idea that charging interest above some level (maybe zero) is unjust, akin to the full-bellied selling food to the starving for a profit. As you probably know, the Compartamos IPO revived within the microfinance world the ancient debate over usury.

A central question in judging microcredit: When can we as creditors trust the judgment of the poor as borrowers? These days we can all reel off examples of unwise borrowing in rich countries (though I daresay unwise lending is more to blame for the current crisis). Do the world's poorest people, with less margin for financial folly, borrow more prudently? Two things I've read recently tend toward opposite answers to this question.

Just as I finished asking When is lending just?, a CGAP report on microfinance institution (MFI) i