The moral economy of microfinance in rural Bangladesh: Dharma, gender and social change

Microfinance is widely portrayed as a tool that empowers poor women to challenge constraining social institutions and make better, rational choices that will enable them to escape poverty. At the same time, the reported impact of microfinance is underwhelming, and scandals and poor practices are widely documented. This then poses a puzzle: why do people still borrow from microfinance institutions? This article seeks to answer that question through an ethnographic examination of the moral economy of microfinance in rural Bangladesh, investigating how morality shapes the remit of legitimate economic activity and social change locally. For men, microfinance fieldworkers use stories of moral ‘idols’ to embed narratives of microfinance within existing rural social institutions as a way to legitimize and normalize microfinance. For women, borrowing is presented as a means to perform dharma — the ‘correct order of things’ — a moral imperative to protect, retain or compete for male guardianship. The moral economy of microfinance is one that motivates people living in poverty to imitate and conform to prevalent gendered and hierarchical norms and values. These arguments highlight the significance of conformity to social and moral obligations in economic behaviour, and bear important implications for understanding the remits of social change.