Microcredit and the Financial Frontiers of Racial Neoliberalism

Abstract

Over the past decades of neoliberal globalization, microcredit has been a widely supported project that claims to address global poverty, inequality, and uneven development through debt-based solutions involving small interest-bearing loans that can be used to fund small-scale business entrepreneurship. Microcredit's promise, though never fulfilled, reflects an approach to development within a broader shift toward financial capitalism, privatization through individualized debt creation, and shrinkage of the social state. Moreover, microcredit (more broadly, microfinance) seeks legitimation in narratives of inclusion, participation, and gender empowerment. In fact, social capital belonging to the targeted populations of microcredit programs in the "global South" is itself often tapped in the service of value extraction. This article forwards a view of microcredit as operating within a logic of racial capitalism. The approach seeks to ground critiques of microcredit's core neoliberal elements within a longer history and broader appreciation of racialized and colonial structures of finance.

Monetary Policy and Deleveraging of Microfinance Institutions in China: A Dynamic Threshold Approach

“…This involves redirecting credit allocation away from sectors with high debt levels, particularly the numerous unproductive state-owned enterprises that heavily rely on loans for survival. Furthermore, it emphasizes the need for credit allocation to be more considerate of credit-starved fields, such as small businesses 1 and emerging enterprises (Gott, 2023). This reallocation is expected to expedite economic transition while mitigating systemic risks associated with high debt level.…”