The contribution of the microfinance model to Bosnia's post-war reconstruction and development: How to destroy an economy and society without really trying

Milford Bateman, Dean Sinković and Marinko Skare

No 36, Working Papers from Austrian Foundation for Development Research (ÖFSE)

Abstract: Academic analyses and impact evaluation studies produced by the international development community almost all conclude that the microfinance model has made an important net contribution to the economic and social recovery of post-war Bosnia and Herzegovina (hereafter Bosnia). However, as we now are finding is also the case in many other countries, these far-reaching claims are almost entirely based upon often deliberately flawed impact evaluation methodologies and inappropriate success criteria. This article provides an alternative assessment of the available evidence accumulated to date which, in our opinion, actually shows that the microfinance model has made a distinctly negative contribution to Bosnia's reconstruction and development effort. We argue, centrally, that the microfinance model has assisted the Bosnian economy to move to an unsustainable institutional development trajectory marked by the deindustrialisation, informalisation and infantilisation of the enterprise sector. More widely, we argue that the microfinance model in Bosnia has led to a sub-prime-style episode in Bosnia's post-war history, one that has materially benefitted a tiny elite working within and around the microfinance sector whilst simultaneously destroying many of the most important pillars of the Bosnian economy and society. We find that the best possible explanatory framework for what has transpired in postwar Bosnia is contained in the "control fraud" concept developed by William Black.

Keywords: microfinance; neoliberalism; Bosnia; deindustrialization; informal sector; control fraud (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:oefsew:36

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