The Early German Credit Cooperatives and Microfinance Organizations Today: Similarities and Differences

AbstractMicrofinance institutions now occupy a central place in development policy. The economic problems that make special microfinance institutions necessary are not new, and several scholars have drawn attention to the similarities between modern microfinance institutions and older lenders. This paper uses a tight focus on one historical institution (Germany's credit cooperatives) and two of the oldest modern microfinance institutions to make a careful point-by-point comparison. Issues to consider include lending policy, typical loan sizes, sources of finance and the role of larger social and other infrastructure in shaping the institution's conduct. I conclude that despite similar goals, the historical cooperatives were different in ways that might offer lessons for microlenders today.

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