Erica L. Hill, Colby College

Date of Award

2005

Document Type

Honors Thesis (Open Access)

Department

Colby College. Global Studies Program

Advisor(s)

Patrice M. Franko

Second Advisor

Ariel C. Armony

Third Advisor

Jennifer A. Yoder

Abstract

The International Year of Microcredit in 2005 facilitates public awareness campaigns of microfinance initiatives. Village banking allows microfinance services to reach a wider geographic region, with particular emphasis on rural regions and the poorest sector of society. It attends to those marginalized by a history of repression and conflict. In Guatemala, ethnic diversity and its accompanying social divisions have deep roots. Guatemala is an important case for village banking because of its economic reliance on village banking, the size of the country, and the large number (9) of VBIs in the country. Recent literature calls for an increase in flexibility of village banking practices. This thesis investigates how the structure of the village banking institutions affects the flexibility in their policies in Guatemala. This paper will show that a more flexible model is an important adaptation for local, non-affiliate village banking institutions that remain committed to poverty-focused group lending. Non-affiliates have been more innovative and adaptive from the original Hatch model than affiliate institutions. They can adapt the initiatives of the UN International Year of Microcredit and connect them with local communities to provide outstanding access to financial services with a commitment to poverty reduction and a deeper client outreach. Ultimately, more flexible village banking initiatives through non-affiliate incubators will continue the fight towards poverty reduction and the Millennium Development Goals in Guatemala.

Keywords

Microfinance -- Guatemala, Financial institutions -- Guatemala, Economic development -- Latin America

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