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Giselle Nicholson Timmerman, MAPP '06, has over nine years of experience working as a strategy consultant and leadership coach in the Americas, Europe, and Middle East. Giselle has pioneered the application of positive psychology to strategy, leadership, and organizations. She has seen the field develop firsthand and is fortunate to collaborate with the very best practitioners in the world via her collaborative consultant network, Positive Work. Giselle serves as President-elect of the Work Division for the International Positive Psychology Association. Full bio. Giselle's articles are here.

Muhammad Yunus

Muhammad Yunus

To expand on my first entry’s musings about income and happiness, I’d like to introduce how the simple principles developed by Mohammad Yunus, last year’s Nobel Peace Prize winner, warrant the interest of positive psychology. If you’ve ever met Professor Yunus, you can immediately see how his kind spirit and strong convictions have helped Grameen Bank not only save millions of lives through microfinance, but empower so many more.

Microfinance is respectably credited as one of the most sustainable and effective routes toward poverty reduction. More than 3,000 microfinance institutions (MFI) throughout the world are serving over 70 million low-income clients by providing access to basic financial services (loans, savings accounts, etc.). This seems an impressive number, however, it’s only a sliver of the over 4 billion potential microfinance customers at the bottom of the pyramid. Microfinance needs to expand and deepen its impact, so great impact assessments are crucial its growth.

Supported by Microfinance

Supported by Microfinance

Worldwide, microfinance is applauded for not only its economic impact, but for its social impact. Most borrowers are women and when these women are able to become micro-entrepreneurs it has an amazing positive impact on their lives – a ripple effect ranging from feelings of empowerment, to more education for their children, to greater social connectedness.

Most MFIs attentively monitor their financial information to measure both institutional success and individual client economic progress. While dedicated to improving the social conditions of borrowers, most MFIs lack a viable systematic approach to fully understand and measure the impacts of their practices. MFIs neglect to incorporate tools into their impact assessments that can quantitatively measure the significant social and psychological benefits that financial access brings. Econometrics cannot explain why people of the same age with similar backgrounds, resources, and abilities experience different entrepreneurial success or express dissimilar proclivities to better their lives.

Currently, most psychological benefits, for example, an increase in borrower’s self-confidence, are limited to anecdotal vignettes. Although increases in borrower autonomy and empowerment may be visible and reliable results from a loan program, MFIs need quantitative data to systematically measure progress, delineate influential variables of success, improve outreach, and attract greater funding.

And this is where positive psychology so aptly steps in! Positive psychology has tools to evaluate the practices of sustainable and socially responsible businesses. The veritable measures of positive psychology can identify the various aspects of well-being that improve with an increase in income, and what impact the ‘loan intervention’ has on borrowers’ reported strengths and enterprise success. As the scale and scope of microfinance lending increases, I believe that MFIs aimed at poverty reduction must have a clearer picture of their impact and potential in order to maintain their social effectiveness.

I am working with one of the largest Arab MFIs to do an empirical evaluation that measures the longitudinal impact of microfinance services on borrowers in order to fully understand the influence and growth potential of microfinance through quantitative measures of well-being.

These are a few of the questions I will be addressing:

  1. In what ways and to what degree do micro loans increase borrower well-being?
  2. Do certain attributes or abilities, such as entrepreneurial qualities or self- discipline, promote timely loan repayment or enterprise success?
  3. Do those with higher subjective well-being (SWB) experience greater economic success?
  4. Do borrowers with lower SWB report greater psychological benefits from the loan intervention than those with higher SWB?

This research is just a fraction of the tip of the iceberg in terms of how positive psychology applies to microfinance, but I’m thrilled to be a part of it. All MFI actors – borrowers, program developers and administrators, investors/donors, consultants, and entrepreneurs – are concerned about the constant improvement and expansion of microfinance services. This research will show where microfinance is making its impact and what helps people benefit most from micro-loans. Better understanding the behavioral traits of borrowers and psychological impacts of loans has tremendous potential for the improving the development, delivery, and growth of microfinance.

I start this research in Jordan in the next few months, so if you’re interested in any more details of the research or have some ideas to share, I’d love to hear from you!



Mohammad Yunus from Wikipedia
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Senia.com - Positive Psychology Blog 13 February 2007 - 10:38 am

What an amazingly rich and wonderful article, Giselle. Thank you! Best of luck to you on your research. I’ve always really liked that positive psychology is about studying how people can be happier, more productive, more successful. It sounds like you’ll be looking at these things empirically. I also wonder:
a) whether happiness (SWB) relates at all to entrepreneurial success
b) whether you’re looking for (or even if you’re not, whether you still may find) that people tend to choose those techniques and tools that work best for them individually. This was one of the most interesting results from the MAPP program for me: there are a lot of positive psychology techniques, and different techniques may work best for different individual people. People need to find those techniques that work best for them individually (Jordan Silberman examined part of this topic in his capstone research).

Thank you, Giselle.

Jeff 13 February 2007 - 12:36 pm

The concept of microfinance has so much power (if assessed and applied well) to change lives around the globe. It is very honorable that you are researching this subject. Personally, I have met some indigenous women from Ecuador who lived in pretty much dire poverty, but were entrepreneurial in that they sold homemade crafts such as llama wool products to tourists. Often they told me that they would take a tiny loan from the local bank and then pay it back as they could do so.

So in that sense, Microfinance is alive and well. Also I think in the US with credit unions you can find microfinance of a different sort. While being poor in the US is different than elsewhere and has its own unique characteristics, the principles of the Grameen Bank and microfinance work here, too.

I am excited to hear more from your valuable research.

Dana 16 February 2007 - 2:32 pm

Great article Gig! I don’t have know much about microfinance, but from your article the application of Pos Psych in developing this field sounds extremely promising. It’s so great that you are involved in this growth. Love, Dana

Giselle 19 February 2007 - 4:41 pm

Hi Senia,

Thanks for your interesting comments. I’m so interested in the relationship between happiness and entrepreneurial success, so I am including a lot of different measures of happiness to tease apart what might be related to business growth and the building of entrepreneurial skills. One component and contributor to greater happiness is definitely the empowerment these women develop throughout the loan process. This of course ties into self-confidence, which makes people better businesswomen – so I think that the links to happiness are definitely there, but are varied and complex…I’m eager to find out!

Giselle 19 February 2007 - 4:48 pm

Hi Jeff,

Thanks for your interest. What an amazing opportunity to be able to meet those indigenous women in Ecuador! The power of microfinance cannot be truly understood until people have been able to experience it’s impact, as you have. I’m glad you brought up microfinance in the US – something people usually don’t expect to exist here, but it’s here! This is an interesting paper about microfinance in the US: http://ideas.repec.org/p/wpa/wuwpdc/0109002.html.

I look forward to sharing more with you as the research progresses,

Jeff 19 February 2007 - 6:49 pm

That’s exciting. Speaking of microfinance, can I borrow five dollars?:shock:

Keep on spreading the word about Microfinance!


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