Disintermediating Avarice: A Legal Framework for Commercially Sustainable Microfinance

35 Pages Posted: 21 May 2010 Last revised: 28 Dec 2014

Steven L. Schwarcz

Duke University School of Law

Date Written: August 1, 2011

Abstract

Although microfinance is emerging as a key tool to alleviate poverty, the need for microfinance lending vastly exceeds the amount of funds that can be raised from charitable donors. Commercial bank lending is supplementing donor money, but microfinance loans made by banks are extremely expensive and sometimes even exploitive. This article examines how innovative legal structures can enable microfinance loans to be funded directly from lower-cost, and virtually limitless, capital market sources by removing, or “disintermediating,” the need for a bank intermediary. In that context, the article identifies and attempts to resolve the resulting law-and-business issues of first impression and also examines, more normatively, the extent to which microfinance lending should rely on capital market funding sources.

Suggested Citation

Schwarcz, Steven L., Disintermediating Avarice: A Legal Framework for Commercially Sustainable Microfinance (August 1, 2011). University of Illinois Law Review, Vol. 2011, No. 4, 2011. Available at SSRN: https://ssrn.com/abstract=1612766

Steven L. Schwarcz (Contact Author)

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States
919-613-7060 (Phone)
919-613-7231 (Fax)

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