Banks in the Microfinance Market

MarioLa Torre and Gianfranco Vento
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Gianfranco Vento: University of Rome ‘La Sapienza’

Chapter 6 in Frontiers of Banks in a Global Economy, 2008, pp 131-148 from Palgrave Macmillan

Abstract: Abstract In recent years, microfinance has taken over from the concept of microcredit. The fight against extreme poverty has become part of a wider objective in the fight against financial exclusion. The supply of products includes other financial services and technical assistance, as well as microcredit. Together with international donors and traditional NGOs, other typologies of microfinance institutions (MFIs) and commercial banks are now present on the market. The entry of banks and other specialized profit-oriented institutions into the microfinance market has stressed the trade-off between the objectives of economic and financial equilibrium on the one hand, and the social goals of microfinance projects on the other. From this point of view, the chapter offers a new taxonomy for modern microfinance and discusses the definitions of ‘sustainability’ and ‘outreach’, identifying the various meanings of these broad concepts. It also analyses the key variables and the operational and management choices that a commercial bank should consider in order to reconcile the aims of sustainability with those of outreach, so as to implement ‘ethically profitable’ microfinance programmes.

Keywords: Interest Rate; Financial Service; Commercial Bank; Credit Union; Microfinance Institution (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-0-230-59066-3_6

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DOI: 10.1057/9780230590663_6

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