The concept of microfinance has been widely applauded and implemented around the world, and is being seen as a panacea for many social ills rooted in poverty. This thesis examines microfinance as the most recent and extremely popular development tool in the international development sector that has believed in standardized solutions towards world poverty since a long time. In less than three and a half decades, microfinance has made its way across most continents with slight variation in models as per the local needs and milieu.
The argument of this thesis is that every country has a unique socio-economic-political-legal context, a unique culture, a dominant ideology, a set of values and governance structure; that poverty in the poor countries and poverty in the rich countries face completely different sets of challenges and threats. The need for financial services and the reasons to administer them may be starkly different in different contexts and therefore the same standard solution, in this case microfinance, may not work everywhere or may even backfire in some cases.
Using three case studies, secondary data, and meta-analysis approach this thesis explores, juxtaposes, compares and contrasts, the main differences in the practice of microfinance and microcredit in developed and developing countries such as India, Bangladesh and United States of America. Based on the arguments presented, this thesis concludes that microfinance is not a ‘one size fits all’ solution to worldwide underdevelopment and poverty; and measures that may work in certain developing countries, may not work the same way in developed countries owing to socio-economic-political-legal differences.