[PEN-L:11384] microcredit

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

"Microcredit in Pre-Famine Ireland"

      BY: AIDAN HOLLIS
            University of Calgary, Canada
          ARTHUR SWEETMAN
            University of Victoria, Canada


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          Date:     April 1997

          Contact:  Aidan Hollis
          E-Mail:   MAILTO:ahollis@xxxxxxxxxxxxxxx
          Postal:   Dept. of Economics, 2500 University Dr., NW
                    Calgary AB, T2N 1N4, Canada
          Phone:    (403) 220-5861
          Fax:      (403) 220-5262
          Co-Auth:  MAILTO:sweetman@xxxxxxxxxxxxxx
          ERN Ref:  HISTORY:WPS97-114

     Hundreds of independent, local, quasi-charitable microcredit
     societies, or "loan funds," were lending to as many as 20%
     of Irish households in the mid-nineteenth century. Monitored
     by a central regulatory authority, funds in the system were
     successful in mitigating informational, moral hazard and
     enforcement problems, and thus operated at a surplus in a
     market where intermediation by the banks seems not to have
     been possible. Created under special legislation, their goal
     was to relieve poverty by providing credit to the "industri-
     ous poor" on a large scale, at competitive interest rates,
     without public funding. Evidence from the loan funds offers
     new insights into capital formation in the Irish economy of
     the nineteenth century and suggests that traditional notions
     regarding the economic activities of the Irish poor may need
     to be rethought; it is also relevant for development
     economists studying current microcredit initiatives.


--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 916-898-5321
E-Mail michael@xxxxxxxxxxxxxxxxx