Microfinance tradeoffs: regulation, competition, and financing

Robert Cull, Asli Demirguc-Kunt and Jonathan Morduch

No 5086, Policy Research Working Paper Series from The World Bank

Abstract: This paper describes important trade-offs that microfinance practitioners, donors, and regulators navigate. Drawing evidence from large, global surveys of microfinance institutions, the authors find a basic tension between meeting social goals and maximizing financial performance. For example, non-profit microfinance institutions make far smaller loans on average and serve more women as a fraction of customers than do commercialized microfinance banks, but their costs per dollar lent are also much higher. Potential trade-offs therefore arise when selecting contracting mechanisms, level of commercialization, rigor of regulation, and the extent of competition. Meaningful interventions in microfinance will require making deliberate choices - and thus embracing and weighing tradeoffs carefully.

Keywords: Access to Finance; Debt Markets; Banks&Banking Reform; Emerging Markets; Rural Finance (search for similar items in EconPapers)
Date: 2009-10-01
New Economics Papers: this item is included in nep-cfn, nep-dev, nep-mfd, nep-mic and nep-reg
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Citations: View citations in EconPapers (1)

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Related works:
Chapter: Microfinance Trade-Offs: Regulation, Competition and Financing (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:5086

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