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Housewives as Guarantors and the Nobel Prize - While Microlending Schemes that focus on housewives as borrowers get the Nobel Prize, the third conference of the Bremen/Oxford research project on unfair suretyships investigates the dependencies and problems which such credits create in developed countries.
In its third meeting, the Bremen/Oxford research project on UNFAIR SURETYSHIPS IN THE ENLARGED EUROPEAN UNION will gather at Hotel Munte (in Bremen on November 3-4 2006) researchers from all over Europe, especially the East and Scandinavia, to discuss the legal and economic aspects of suretyships which use family ties as a means for debt enforcement. While such use has been partly voided in Germany by order of the famous decision of the Constitutional Court, and while other countries set limits to such practices, the Norwegian Nobel Prize Committee has given the 2006 peace award to the Grameen Bank in Bangladesh. Despite the bank being already highly decorated with over 50 prizes and enjoying the strong support of the World Bank, are the claims that poverty can be alleviated by small credit only, really accurate? As this is largely also taken as best practice for Europe and America one should carefully investigate why World Bank, ILO, EU-Commission, many western governments and lately the Council of Europe, invest enormous amounts of money to make such unsophisticated non-bank loans work. The empirical research on its efficiency in the USA is not very encouraging especially after the failure of Working Capital in the US, and Streets in the UK. Some researchers claim that Microlending serves more on ideological grounds, where it is asserts (through the mouth of the new Nobel Prize winner who got his training in the USA) that credit (obviously with no regard of its different cost elements) should be paid back in full and can be used as an educational tool to lecture poor people about economic behaviour.

While there is no doubt that such programmes provide poor people with working capital, the question is how these schemes could be freed from their paternalistic approach and made more responsible to liberal values, and how one can bring the achievements of modern banking closer to the poor in a away that these grassroot or archaic forms of credit extension are unable to do.

(for more critical comments on Microlending click on link below)

ID: 38813
Author(s): iff
Publication date: 26/10/06

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Background on the Suretyship Conference

Created: 26/10/06. Last changed: 26/10/06.
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