Microfinance Horizon

Author(s): Arvind Ashta, Saleh Khan, and Philipp E. Otto

Abstract:

At a time when suicides by microfinance borrowers in Andhra Pradesh are extensively discussed, this paper makes an initial tentative exploration into the impact of microfinance on suicides. Does MF reduce or increase suicides? Data limitations imply methodological limitations and provisional conclusions. The literature review of research on suicides brings out the importance of psychological factors, divorce and unemployment. We study time series data on suicides and microfinance in India. A global cross-sectional correlation analysis validates the relationship between suicides and divorce rates and brings out new relationships with poverty parameters. Regression analysis of 31 countries (weakly) indicates that microfinance penetration is a causal factor for suicides. Three related questions are put into context. First, do rapid growth and sustainability aims make MFIs forget the human angle? Second, is social pressure necessary to make people repay?

Third, does Microfinance incite, reduce or delay suicides, and is this impact more on women or on men due to changing roles? Based on these, we tentatively propose policy recommendations more on women or on men due to changing roles? Based on these, we tentatively propose policy recommendations.

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