What next for Microfinance? How the broader financial context matters for effective microfinance outreach
Vol. Volume 17, Number 4 December/2012
This paper explores how the overall development of the financial sector and the regulatory framework impact national levels of microfinance outreach. It finds that microfinance tends to serve more clients in less developed, less competitive financial systems. However, it also finds that the microfinance sector is able to reach more clients where government policy is conducive to business development. These seemingly contradictory findings have important implications for the future of microfinance. On the one hand, the success of microfinance can be strengthened by broader business-oriented reforms. On the other, it may lose relevance as the formal financial sector develops and reaches more of the population.
Microfinance, Development, Financial System, Business Policy, Regulation