Abstract

I shall consider the preferred design of micro-lending (microfinance) institutions in the poorest parts of the world, and also in richer jurisdictions where welfare state provision is shrinking. The institutions needed in these different contexts are, unsurprisingly, different, and part of their design involves interacting with institutions that are not primarily designed to reduce poverty. I shall assume that design considerations also extend to exploiting opportunities thrown up by globally significant recent events: the world banking and financial crisis has altered the image of large mainstream retail and investment banks. The fact that they had a large share of the responsibility for the crisis has prompted many developed country governments to impose punitive taxes on them: some of the proceeds could well be used to support financial services for the poor. Again, some tax incentives could be used to promote certain kinds of partnerships between developed country banks and Southern micro-lending institutions.