Banking on Social Entrepreneurship: The Commercialization of Microfinance

Jay K. Rosengard

Mondes en développement, 2004, vol. 126, issue 2, 25-36

Abstract: Two seemingly separate disciplines, social entrepreneurship and sustainable microfinance, have both matured and converged over the past two decades, so that the latter has become a dramatic example of the successful application of the former. Sustainable microfinance demonstrates that banks and commercially oriented NGOs can ?do well by doing good? : they can generate considerable profit while at the same time have a significant positive development impact. Sustainable microfinance institutions are innovative creators of social value in that they pursue business opportunities where financial performance and social impact complement rather than compete with each other. They apply conventional banking precepts in an unconventional manner, creating commercially viable financial institutions that double as social change agents. Despite the many opportunities presented by scaling down or scaling up, there is still a vital role for non-commercialized microfinance. It is essential to match the appropriate institutional model, whether a bank, finance company, membership-based organization, or subsidized NGO, with the microfinance organization?s mission. The guiding principles should be institutional diversification, product differentiation, and market segmentation.

Keywords: Entrepreneurship; Microfinance; Social; Sustainable; Development; Banking; Finance; NGO; Scaling-up; Scaling-down (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (7)

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