Week 15 Reading Reflection

1. While reading the article, I found the biggest surprise to be the sheer focus on the customers with a large disregard for near-term monetary profits. It looks at things on the highest level, which makes sense- especially after reading the article. However, at first, I definitely thought that undermining a firm’s short-term interest would not be ideal. A lot of these companies need growth and without proper financing in place, short-term shortfalls can be damaging. However, scale over time can exponentially erase any harm done at the start. It also emphasizes a profit-oriented approach, which can help mitigate these issues.

2. I am not overly familiar with microfinance, as we live in a world here that largely does not apply to the world of microfinance. I started to get a clearer picture after reading the article, but the field of microfinance is obviously much more complicated than what a short article can simplify.

3. How do you handle the drastic cultural differences between you and your customers? Is it necessary to study the individual cultures specifically and in-depth as much as it is to understand the finance and money side of things? Clearly the article lauds scale as an important aspect to the company’s success in next generation microfinance, so I would see cultural understanding as very important to the success of such a firm. Also, would your firm ever consider lending to men or is it just too embedded in your business model to risk running astray from something that works? Passing up a good opportunity could have tremendous opportunity costs if men can meet the general criteria you like in men in certain cultures.

4. While I understand the author’s argument for standardization, lending money is not standardized. Each loan recipient is unique and brings with her idiosyncratic risk. People also have different indifference curves (to take a term from economics) as far as risk/reward goes. Additionally, with scale comes new markets. And with the developing world, new markets are drastically different from already-penetrated markets. Technology cannot, in my opinion, account for all of these differences to reduce the inherent risk in lending.