Faculty Profile

Since 2000 Julia Paxton has served as associate professor in the department of economics here at Ohio University. She specializes in development economics and microfinance and has done research on microfinance and group lending in Africa where she has modeled group loan repayment behavior in Burkina Faso. In addition she has done extensive research on rural finance in Mexico and has worked with Technical Assistance to Rural Microfinance Project (PATMIR), a project specializing in technical assistance focused on achieving financial inclusion of marginalized rural population from Mexico. Her professional experience in microfinance includes working as Microfinance Consultant for The World Bank, BANSEFI, SAGARPA, and ALO. In 2005 she coordinated financing between International Studies and the Economics Department to bring. Mike Goldberg from the World Bank to speak about  the World Bank's approach to Microfinance. Dr. Paxton continues to teach courses on development and agricultural economics highlighting outreach and sustainability of financial institutions, savings by the poor, group lending. Her most recent research focuses on how access to microfinance influences the savings patterns of poor households in Mexico. Recently she talked with me candidly about the role of microfinance as a tool for development!

In the past few years microfinance has come under increased criticism by
development practitioners who see the operation as reinforcing the stigma of
money lending making people vulnerable to accepting financial support from
more exploitative forces, what are your opinions of such criticisms? How do
you view the role of microfinance as a tool for economic development?

"....A microloan is the same as taking on debt. In many cases, assuming more debt is not the most beneficial path for a poor person. Other types of development interventions or financial products might be more appropriate. For example, the demand for secure savings facilities is highly valued by the poor. However, almost all people need access to credit at one time or another in their lives. The more options that poor people have for financial services, the better. Providing microfinancial services to the poor is costly, particularly in rural areas. This sometimes results in high interest rates. Microfinance institutions need to be vigiliant to keep down costs in order to provide the most benefit to their clients. People who look to microfinance as a panacea to world poverty may be disappointed. Nevertheless, it provides the incredibly important service of smoothing the incomes of a vulnerable population and allowing them to have usefully large lump sums of money for emergencies, investments, education, special events, or consumption."

In this decade,where do you see the future microlending heading, do you
see changes in the way in which it operates as tool of economic development
for developing nations?

"...More innovations are needed to drive down the transactions costs of lending both for the microfinance institutions and for the clients. There is some exciting technology that may help this occur as we head toward a more cashless, electronic economy. The industry is heading into a wider array of financial services. The most innovative programs not only supply microloans, but also provide other extremely useful financial services including savings instruments, remittance

Contact Julia Paxton Paxton@ohio.edu

services, microinsurance, housing loans, etc..."