Michael Munger on Microfinance, Savings, and Poverty

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4.7 • 4.3K Ratings

🗓️ 18 April 2011

⏱️ 58 minutes

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Summary

Mike Munger of Duke University talks with EconTalk host Russ Roberts about microfinance. Munger argues that cultural forces make it difficult for some families to save, and the main value of microfinance is to allow a higher level of savings. Families are willing to save via microfinance even though returns can be negative. Munger argues that this counterintuitive result is possible when other means of savings are unavailable. Munger also discusses microfinance that is used for entrepreneurship and the potential role for microfinance in development.

Transcript

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0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts
0:13.9	of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org
0:21.2	where you can subscribe, find other episodes, comment on this podcast, and find links to
0:26.5	other information related to today's conversation. Our email address is mailadicontalk.org. We'd
0:33.6	love to hear from you. Today is April 6, 2001, and my guest is the repressible Michael Munger
0:43.5	of Duke University. Mike, welcome back to Econ Talk. It's a pleasure to be on. I know this is a relief
0:51.7	to a lot of our listeners who keep bugging me. Where is Mike Munger? We're really glad to have you
0:57.5	back. Well, I'm glad to be back and in fairness to Russ and the listeners, I've had a series of
1:03.8	eye surgeries that have prevented this. It wasn't that Russ didn't try, so it's my fault. Not totally
1:09.3	true. We did schedule one that we executed, and I managed to destroy the file through that's
1:16.8	happened about twice now in the 250 episodes, so Mike, you're too kind. I feel important. I don't
1:23.0	think you actually do a rehearsal with most people. That's true. That's true. Congratulations. So what
1:30.5	we're going to talk about today is microfinance, which is a very broad term. So first, let's talk
1:37.1	about what is under that umbrella and the range of activities that fall under the name of microfinance,
1:43.3	and then we'll narrow it down a little bit. Well, what I in thinking about this tried to start
1:50.0	out with was what sort of things do we mean by finance? So if you think of the kind of financial
1:56.0	intermediaries that any advanced nation have, things that we just take for granted are a savings
2:00.6	account, a place that I can put savings and have it be safe and maybe aren't a small amount of interest
2:05.8	checking or some way of doing payment transfers so that I don't have to pay everything in cash.
2:12.2	Some way of getting creditor loans and insurance insurance are various kinds and we take all of
2:18.4	those things for granted even to the extent of having a credit card that if it's a debit card actually
2:23.7	is all of those things. It's a way of paying. It's a way of getting credit and it's a way of trying
	...

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