Transcript Arvind Ashta - e-MFP

Microcredit and religions :
with a focus on Hinduism
Dr. Arvind ASHTA
Microfinance Chair
Burgundy School of Business
CEREN, CERMi
My thanks to Banque Populaire de Bourgogne Franche Comté
3 -4 nov 2011
European Microfinance Week, Luxemburg
Religion and Microfinance
Both have social impact objectives
Can they be mutually reinforcing
RelIgion
Microfinance
2
Yet not much research done on these
Abstracts in EBSCO on Dec 21, 2009
Default terms
Religion OR
religious
Alone
(Religion or
religious) AND
(Religion or
religious) AND
(entrepreneur OR
entrepreneurial
Or
entrepreneurship
) AND
(Religion or
religious) AND
(finance Or
Financial) AND
49031
xxx
xxx
xxx
entrepreneur OR
entrepreneurial OR
entrepreneurship
OR business OR
enterprise
2051476
4426
xxx
614
Finance or
financial
1499043
2447
614
xxx
Microfinance OR
microcredit
1699
16
6
2
Microentrepreneur
OR
microenterprise
412
4
1
3
Ashta & De Selva, 2010)
3 are common, so
17 total
Note: last two columns are
subsets of preceding column)
Our possible research Questions
Ashta & De Selva 2010
Is economic success sufficient or is social success also necessary?
• Mafia has economic success: does it have social success?
Does social success require religious approval?
• Especially in an "illiterate" village surrounding
Does the taking of a loan require approval by the social gurus (religious guru?)
What kind of religious practices, if any, are used by Beneficiaries of microcredit?
Do these practices support them in their economic behaviour and, if so, how?
Is there a link between the actual achievement (actual economic performance) and religious behaviour?
Is the priest/saint a maven permitting linkage/ networking social capital?
Does religious benediction reduce fear of failure/ increase confidence or optimism
Do poor people repay better because they are more religious?
The spiritual and the material
Very broad questions….
Is the
spiritual
separate
from the
material
Does
microfinace
change the
nature of
spirituality
• Does the spritual include
the material?
• Does the spiritual add to
the material?
• Does the material add to
the spiritual or detract
from the material?
• From Spirituality as
refuge of the poor
• To spirituatlity as
actualisation (Maslow)
Lybbert (2008)
Backgound information on some religions
Attuel-Mendes, Ashta & Pic, 2011, Ashta 2011
Hinudism
Judaism
Christianity
Islam
Origin
3000 BC or before
3000 BC
0
600 AD
Gods
Monotheist
Polytheist
Pantheist
Dualistic
Qualified monism
Monotheist
Monotheist
Monotheist
Scriptures
Vedas, Upanishads,
Shastras
Puranas
Pentateuch of
the Bible
(Torah)
Bible and Gospels
Koran
Sects
Many, examples:
Sanatam Dharam, Arya
Samaj but also offstreams
such as Budhism,
Jainism, Sikhism
Orthodox
Roman Catholic,
Protestants (many)
Sunni
Shiites
Ismailies (Aga
Khan)
Symbols
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How is money viewed in these
relgions
Hinudism
Judaism
Christianity
Islam
Duty, Money, Pleasure and
Salvation are the four
principles virtues / aims
Divergent
interpretations
on the texts of
Genesis
Roman Catholics
don't talk about
money
Trade and Allah
mentioned by the
prophet
Protestants
consider it as a
reward for hard
work
Distinct field of
islamic finance
Central role given to
Lakshmi, the Goddess of
fortune
The Goddess is fickle and
the Gods and the
Rakshasas fight over her
Questions the
possibility of
making money
with money
Money by itself is
unproductive
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Interest rates and religion
Hinduism/ India
Judaism
Christianity
Islam
Manusmriti: up to 60% per annum
according to caste
Arthashastra: up to 240% per year
for sea voyages (high risk)
Prohibition of Tarbes
(practical interest)
Initially between
Jews,
Prohibition in Antiquity
and Middle Ages:
"Money does not use"
Riba is one of three major
prohibitions
Pious obligation: with real estate,
three generations have to pay with
interest
Dampudat (with no inheritance) sons
still need to pay with interest but next
two generations without interest
(Sharma 2011)
Can charge interest
for non-Jews
Thomas Aquinas
(thirteenth century):
relaxation of the ban
No prohibition of money
lent for remuneration or
profit
Principle of sharing profits
and losses
The role of Karma: Cannot leave a
loan unpaid in this life… because
may be indebted in future ones
(Seibel & Nurcahya 2009)
Today: Legitimacy of
lending at interest
In many countries, both
islamic finance and normal
finance
Ordinance in October 2010 to 100%
capping the interest rate in Andhra
Pradesh
May 2011: RBI caps at 26% if MFI
wants to benefit from priority sector
status
Ceilings in some
developed countries and
not in others
Ceilings of 27% in B'Desh
and W. Africa
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MFIs and religion
Hinduism/ India
Judaism
Christianity
Islam
The power of customary governance in
financial institutions of the
customary village and the Balinese
culture of honoring one’s obligations
have played a role. (Seibel & Nurcahya
2009)
The customary system is comprised of
customary villages (desa adat, desa
pakraman) and constituent customary
communities (banjar)
United
Jewish
Social Fund
Catholic
Committee
against Hunger
and for
Development
(CCFD)
Study in Indonesia (Seibel, 2008)
SKDRDP
Rural development program started
from a Hindu Temple run by a Jain
priest.
(Harper et al , 2008)
Not
exclusively
reserved to
the Jewish
community
Oikocredit
coopertive
(protestant) but
loans to all
Rural banks, including Islamic rural
banks, have not done well in
Indonesia. Unsupervised
cooperatives, including Islamic, are
dangerous to savers
(Seibel 2008)
Interest rates of 12.5% to 13.5%
(compared to 24% to 30% by for-profit
top ten MFIs)
Interest Rate
0%
Interest rate
varies with the
country
Mudarabah (investing)
Murabahah (purchase and sale)
Charitable Loans : Qard al-hasan
Development of a microfinance
based mainly on Islamic
Murabahaj (purchase and resale)
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Figure 1: The development perspective places the
microentrepreneur at the centre
SKDRDP
furnishes
microfinancing
SKDRDP
furnishes raw
material
Ashta 2011
Micro
Entrepreneur
SKDRDP
furnishes
technical
advice
The temple
creates the
trust in
SKDRDP
SKDRDP
does the
marketing
Figure 2: SKDRDP uses outside
processing
Raw
Materials
Finished
Goods
SKDRDP
Outside
processing
Microentr
epreneur
Ashta 2011
Microentr
epreneur
Microentr
epreneur
References
•
Harper, Rao and Sahu (2008), « Development, Divinity and Dharma: The role of religion in development and
microfinance institutions», Practical Action Publishing, Rugby, UK
•
Lybbert, T.J. (2008). Exploring the Role of Spiritual Capital in Poverty Traps and Microfinance. Faith and
Economics(51), 57-79
•
Seibel, H.D. (2008): Islamic Microfinance in Indonesia: The Challenge of Institutional Diversity, Regulation, and
Supervision, Joumal of Social Issues in Southeast Asia Vol. 23, No. 1, pp. 86 -103
•
Seibel & Nurcahya (2009): Growth and Resilience of Savings-based Microfinance Institutions in the Face of
Adversity: The Case of the Lembaga Perkreditan Desa in Bali
•
Ashta & De Selva (2010) Religious Practice and Microcredit: Literature Review and Research Directions
•
Attuel-Mendes, Ashta & Pic (2011): Microcrédit et religions : regards croisés, présentation à Strasbourg
•
Ashta (2011): Hinduism and Microfinance
•
Sharma, A. (2011): Principles of Finance in Hinduism, Agefi, Luxemburg
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