The Microfinance Movement: An Analysis of the Reach and Scope of Microfinance Institutions in the Developing World
In the face of high transaction costs and information asymmetries in rural credit markets, micro finance institutions have evolved over time in an attempt to provide sustainable financial services for the world's poorest populations. This paper analyzes a number of case studies from around the developing world, isolating the specific endogenous and exogenous factors that have led to the wide spread success of MFIs. While formal financial institutions have failed to meet the credit needs of the poor, MFIs have used existing social customs in rural areas, in coordination with realistically high interest rates, group lending models, female focused lending, innovative repayment incentives, non-financial services, and necessary employee monitoring tactics to effectively provide credit services that will, eventually, lead to financial sustainability for poor populations.
Date of Completion
Harker, McKenzie M., "The Microfinance Movement: An Analysis of the Reach and Scope of Microfinance Institutions in the Developing World" (2006). Economics Theses. 17.