RUME survey

The project, RUral Microfinance and Employment (RUME), has been selected in December 2007 by the French National Agency for Research (programme: Les Suds, Aujourd’hui). It deals with the impact of microfinance on rural employment. It is based, notably, on a combination of econometric and anthropological approaches.

The main objective of the project is to explore the linkages between rural finance and rural employment – including diversification and migration – with a view to contributing to the ongoing discussions and interventions in the fields of rural development and poverty and vulnerability reduction.

Microfinance services are expected to contribute to rural development and poverty/vulnerability reduction. Emergency loans, savings and micro-insurance are expected to mitigate vulnerability. Microcredit is expected to strengthen local rural employment (diversification, self-employment, wage labor). Remittances are expected to improve the conditions of migration. While microfinance has been given much attention and resources by policymakers and donors, there are still controversies about whether and under which conditions rural microfinance can hold its promises.

The RUME survey is a socio-economic survey conducted in rural Tamil Nadu in 2010, in 10 villages and 405 households. Combined with NEEMSIS survey, it provide a unique panel dataset on 382 households between 2010 and 2020-21.

---

Main findings

1. Microfinance is now highly controversial having long been perceived an effective tool against poverty. The RUME project’s first outcome is to show that microfinance is neither “good” nor “bad”. It can facilitate trajectories of accumulation and improve households’ resilience, or hasten vulnerability, over-indebtedness and social isolation. Microfinance’s diverse effects depend on a) quality of service, defined here as the capacity to fulfil a variety of needs at reasonable costs, b) socio-economic and political local contexts and the conditions in which microfinance is implemented, in particular the degree of competition and saturation of the supply, and c) the ways in which services are appropriated or even subverted by customers. Clients do not passively consume, but translate and interpret microcredit services according to their own frames of reference, adjusting and adapting them while often bypassing the rules to do so. Appropriation patterns largely depend on a) local economic potentialities, both in the farm and non farm economy b) interrelationships with so-called “informal” financial practices (ranging from substitution to leverage effects) c) the integration of microfinance organizations into local political arenas.
2. The second outcome of the RUME project is to contribute to current theoretical debates on so-called “formal” and “informal” financial practices, in terms of juggling and frameworks calculations. Our observations refute arguments of dualism and segmentation, showing that people combine a wide variety of financial relationships, borrow and repay with a very high frequency, and are both lenders and borrowers. Our interdisciplinary approach helps to highlight the economic and financial characteristics of juggling practices (lenders’ liquidity constraints, high cost, etc.) and their social dimension (juggling allows debtors to multiply social ties while minimizing dependency). Juggling has specific rationales and purposes, which in turn are embedded within specific calculation frameworks, defined here as the set of thinking tools that are available and mobilized by individuals in specific situations. These tools are not necessarily sophisticated or formal, but have multiple cognitive, routine and social-based dimensions. They stem from social interactions and are thus embedded within individuals’ social positions, particularly with respect to class, caste, gender, ethnicity, etc.
3. The project thirdly offers a micro and macro analysis of a phenomenon that is emerging in the three areas studied, albeit unevenly: household over-indebtedness. We argue that such over-indebtedness is shaped by and constitutive of the current contradictions the regions studied all face to varying degrees. On the one hand, aspirations for integration and individuation are increasing, with resulting most notably in rising consumption and the will to engage in contractual debt relationships. On the other hand, real incomes are stagnant or declining, and social protection is inadequate or entirely absent.
4. The final major outcome of the RUME project has been to offer a definition of the social responsibility of microfinance that comes within a broader reflection on the role of market and democracy in contemporary societies. Theses four main outcomes have been positively received in terms of scientific publication and numerous contributions to public debate. They represent an innovative contribution to current debate on the legitimacy and impact of microfinance, and offer significant added value to current theoretical reappraisals of finance and debt. They confirm the value of interdisciplinary and contextualized research methods combining a variety of tools and analytical levels.

---

Documentation

---

Data

Datasets are available on Harvard Dataverse.

In order to comply with the general data protection regulation, the data has been anonymised, i.e. the names and addresses of respondents have been removed.

---

Contact

Isabelle Guérin,
CESSMA,
Université Paris Diderot,
Case courrier 7017,
75205 PARIS CEDEX 13, FRANCE.
isabelle.guerin@ird.fr