Violence in Kenya and Pakistan Challenge the Microfinance Moldel.

Microfinance has been been one of financial innovations best able to empower people at the bottom of the pyramid to plug into economic growth and move out of poverty. But the recent political violence in Kenya and Pakistan—two countries with deep microfinance operations—is undermining the effort. In Kenya especially, thousands of people who took out loans to build businesses have seen everything destroyed by mobs. They cannot pay back these loans. In the West, “Too Big To Fail” is the motto for government policy toward big banks, which translates into bailing them out of bad loans because their bankruptcy would threaten the entire economic system.

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