Flagship Research Quarterly of the Indian School of Business (ISB). Find out more

Sign up  |  Log in

Past Issue • Jan-Mar 2014

Agent Intermediated Loans: A New Approach to Microfinance

With evidence growing that traditional microfi nance may not be offering the expected poverty alleviation benefi ts, it may be time to consider alternative approaches to microcredit, suggest Professors Pushkar Maitra, Sandip Mitra, Dilip Mookherjee, Alberto Motta and Sujata Visaria. In this article, they describe the results of their experiment with Agent Intermediated Lending, an approach that seeks to make microcredit work for the agricultural poor.

When the 2006 Nobel peace prize was awarded to Mohammad Yunus and the Grameen Bank, the Nobel Committee’s citation said: “Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty. Microcredit is one such means.” There are many hopes pinned on microcredit, and not surprisingly, the number of households with access to microcredit has grown rapidly in the past decade. However, evidence is increasingly emerging that microcredit may not be delivering all the outcomes that have been hoped for. In what came as a surprise to many, a recent high-profile study conducted by the Jameel Poverty Action Lab at the Massachusetts Institute of Technology found that when Spandana, a microfinance institution (MFI), began to provide microcredit services in Hyderabad slums, take-up was low. Even among those who did avail of microcredit, the credit infusion did not change household consumption levels or assets (Banerjee et al 2013). Contagious defaults are another serious problem that can undermine the viability of MFIs, as witnessed in the 2008 microfinance crisis in India (Banerjee and Duflo, 2011; Gine et al, 2011).


  • Pushkar-Maitra

    Pushkar Maitra

    Professor of Economics at Monash University, Australia.
  • Photo(sandip) Mitra

    Sandip Mitra

    Assistant Professor in the Sampling and Official Statistics Unit at Indian Statistical Institute.

    Dilip Mookherjee

    Professor of Economics at Boston University.
  • albertomotta_photo-e1389851601530

    Alberto Motta

    Assistant Professor of Economics at the University of New South Wales.
  • Sujata Visaria

    Sujata Visaria

    Assistant Professor of Economics at the Hong Kong University of Science and Technology.
Scroll To Top