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Abstract

Microfinance provides financial services to the extremely poor who are not served by banks. At the heart of microfinance is microcredit which provides small loans to the unbanked poor to seed small local businesses. Microfinance may help alleviate poverty because access to finance has a positive impact on economic development. The unmet need of the poor for financial services spawned over 11,000 microfinance institutions (MFIs) by 2010, but 90 percent of these MFIs are small with fewer than 10,000 clients. This article presents three case examples of MFIs in India that deployed information systems (IS) to increase the scale of their operations. Each example illustrates how IS helped MFIs achieve financial sustainability through scaling despite the necessity of using “door-step banking” which requires the MFI’s agents to visit clients in remote areas. By presenting microfinance examples that impact the economic empowerment of the poor, this article addresses the dearth of research on the use of IS to effect social change at the bottom of the pyramid. The article’s subject matter also provides engaging material for IS coursework and teaching.

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