Ten years ago, “The Microfinance Schism” was published in World Development (vol. 28, no. 4, 2000). I had become frustrated sitting in meeting after meeting, especially in Washington, with people talking past each other. Some took the view that microfinance should be first and foremost a social intervention. Others argued that it should be profit-driven. Many argued that you could achieve both goals without making trade-offs. No one had good evidence, and few had a strong conceptual frame.
It’s a debate that hasn’t gone away. In fact, the debate has become more rancorous, especially given the current tensions in South India following the SKS IPO. Muhammad Yunus and Vikram Akula are the current combatants.
“The Microfinance Schism” parsed the arguments and aimed to show the true nature of divides. Here’s the abstract:
Leading advocates for microfinance have put forward an enticing “win-win” proposition: microfinance institutions that follow the principles of good banking will also be those that alleviate the most poverty. This vision forms the core of widely-circulated “best practices,” but as a general proposition the vision is fully supported neither by logic nor by the available empirical evidence. Recognizing the limits to the win-win proposition is an important step toward reaching a more constructive dialogue between microfinance advocates that privilege financial development and those that privilege social impacts.
The paper took much longer to write than I expected, partly because I struggled to write clearly, a skill that I had somehow mislaid during graduate school. Also, I wanted people who disagreed with me to find the paper useful, so I developed arguments beyond those already on the table. Some of that effort must have worked, because the paper found its way on to many university syllabuses and, according to Google Scholar, it’s the fourth most-cited publication on “microfinance.”
So, ten years later, I have a confession to make: the paper was almost never published. It was only published because one of the referees was either too lazy, too busy, or too fed up to complete their review.
In the first round of review, one of the referees thought the paper was okay and didn’t seem to mind if it was published. The other truly hated the paper. Truly hated it. The nub of their complaint was that I didn’t appreciate the merits of the pro-commercialization view and that I hampered progress by raising the use of subsidy in too favorable a light. The editor saw one positive report and one very negative report and rejected the paper.
But this was my first submission to World Development, and even though it’s a leading journal in the field, I had imagined that the paper would at least get a chance at revision. Plus I thought that my arguments were right. So I did what I should not have: I asked the editor to give me another chance. Fortune was on my side, and the editor relented.
I knew I had a really tough combatant in referee #2, so I worked hard to strengthen the piece. I re-thought arguments and re-balanced the essay. I’d like to say that referee #2 was then thrilled with the revisions. But the truth of the matter is that they never responded to the editor. Maybe they thought the paper was still utterly hopeless. Maybe they disliked it even more after the revision. Whatever the case, the editor wasn’t sure what to do, but she eventually threw up her hands and decided to publish the paper.
So it was with more than the usual pleasure that I recently received a letter from the publisher of World Development. The letter starts: “I am delighted to inform you that your paper is one of ‘The Top 10 Most-Downloaded Articles’ published in World Development between 2005 and 2010.” Enclosed was a certificate on heavy stock suitable for framing.
I want to say thank you, World Development, for the opportunity to publish in your journal. And thank you, editor, for giving the paper a shot. Thank you referee #2, for making me think much harder about the arguments -- and thank you, especially, for choosing not to write back.