Access to Credit and Development

I thought to write about this interesting topic ‘Access to Credit and Development’ as it was discussed in today’s class after the movie.
It has relevance with Dr. Krier’s discussion in previous class regarding ‘Theory of Leisure Class’ by Thorstein Veblen in which he brings up the idea of conspicuous consumption where people spend in a snobbish way just for maintaining high social status. Similarly, many people try to emulate those rich and snobbish people in order to be classified in the same status in society.
Looking at the development level of society in developed countries (North), the industrial revolution had a thrust on production which resulted a rapid growth of consumer’s class. In addition to necessary goods of consumption, it created the demands of luxurious goods and services. It was access to credit which enabled the consumers to have so many unnecessary goods or services which they did not need to consume but they consume it for showing their high status in society. Therefore the infrastructure and expansion of the businesses took an abnormal turn.
One can find it from the movie we saw today as how people of high social status had been living couple of centuries ago and how this consumerism and access to credit provided the middle class to enjoy those leisure’ through credit. But one has to agree that access to credit have provided middle class the opportunity to enjoy the pleasure of those luxuries which centuries ago they never dreamt of as resources were concentrated in few families or elite group. But this bubble of credit though enabled the middle class to fulfill their dreams of leisure to emulate rich but it made rich more richer and middle class an engine of consumption.
But there is a flip side of the coin too. This consumerism brought us to this global financial crunch. This bubble was neither real nor sustainable to cater the demands of so many consumers. Similarly, it brought pseudo development rather than ‘sustainable development’. How this financial shapes a new world is still to be seen and an important area for sociologist to dig deep into.

Access to Credit in developing countries is altogether a different phenomenon. For instance in many African and South Asian countries people do not have access to credit. Though consumer financing had been introduced in some developing economies and have a similar trends of using these credit cards in luxury items but it did not spread in all the developing countries and among all the sections of societies as it is more prevalent among urban growing middle class rather than rural poor.
But I also want to share a success story of Access to Credit and Development in some developing countries and particularly in Bangladesh. Dr. Yunus, a Nobel laureate, introduced the concept of micro finance credit scheme. His organization Grameen Bank disseminated small scale credit among the poorest of the poor women in Bangladesh. The bank provided vocational training to those women. These women started their own small businesses and it brought a revolutionary change in their lives. It really helped Bangladesh to pull millions of families from poverty and also empowered the women for having an independent income for their children.
Micro-finance has its limitations as World Bank and other multilateral institutions are promoting frameowork of ‘one size fits all’ while ignoring the ground realities of different countries. But still it’s a very successful ‘Access to Credit for Development’.
Grameen Bank: http://www.grameen-info.org/

1 comment:

  1. Roshan, this is a good assessment of micro finance. You provide a good example from Bangladesh. Surely, access to credit has increased the level of consumption. We tend to consume more than we need and keep piles of stuff in our homes which we never use. I have visited a couple of homes with stuff that they have never used for years but posses them for status. I have also observed that the rich start micro finance institutions to exploit the poor. I have seen credit institutions swindle clients money in the name of ‘helping the poor’.