The Commercialization Of Microfinance

* Addresses key issues related to bringing microfinance into the commercial realm * Written by prominent practitioners and scholars from a variety of organizations While many microfinance organizations started as NGOs, there is now a growing movement for them to transform into regulated, for-profit entities. Concurrently, commercial banks, credit unions, and specialized investors are also entering the market. The Commercialization of Microfinance synthesizes case studies from Latin America and beyond, delving into the trends and challenges of converting microfinance institutions into commercial entities. Prepared by ACCION, this book will be essential reading for anyone interested in understanding how the world of microfinance is changing, and how that world affects the broader processes of development.

This study is the fourth of a series of publications resulting from a regional technical assistance project on commercialization of microfinance. The series comprises four country reports (on Bangladesh, Indonesia, Philippines, and Sri Lanka) and a regional report on perspectives on commercialization from South and Southeast Asia. This report: analyzes the progress toward commercialization of Indonesia's highly diversified and predominantly formal microfinance industry; explores the implications of commercialization and the remaining challenges to expanding outreach on a sustainable basis; recommends positive approaches to the expansion of commercial microfinance while preserving the traditional social objective of MFIs of expanding access of the poor to demand-driven, sustainable financial services.

Analyzing the progress toward commercialization made in Bangladesh's relatively developed and competitive microfinance industry, this report explores the challenges and implications for various types of stakeholders. Recommendations for positive approaches to improve commercialization of microfinance while preserving the social objectives of microfinance institutions are covered in detail.

The gap between the potential demand for, and the actual supply of, microfinance services remains large. Bridging this gap remains a major challenge. Microfinance reduces financial exclusion and can have a significant impact on poverty reduction. Commercialization of microfinance is a possible solution for expansion of microfinance.

Text: Published in collaboration with Practical Action Publishing (London), this book shows commercial bankers that providing micro-finance services to the poor makes good business sense.

The objective of this report is to facilitate the understanding of the process, implications, and approach of commercialization among the stakeholders in microfinance in Sri Lanka. This study considers commercialization of microfinance at both micro and macro levels and analyzes the progress toward commercialization made to date in Sri Lanka's microfinance industry. Also explored are the remaining challenges and implications for various types of stakeholders, including microfinance clients, practitioners, government officials, and funding agencies.

This book analyses three key aspects of microfinancing, namely social purpose, commercialization and innovations and examines, through a global perspective, how these aspects helped and diverted microfinance institutions towards the attainment of their dual goals over the last twenty years. Since microfinance remains informal in nature for most economies, not all financial innovations are suitable for its needs. Hence, the arguments in the book put forth an important challenge to the advocates of innovations and subsequently highlight why MFIs should be cautious when integrating innovations to ensure its original promise. The book is based on empirical analysis by utilising the latest and global microfinance market data, rather than focusing on a specific region. Thus, the book bridges a gap in knowledge by unravelling detail of the social purpose, commercialization and innovations within the field of microfinance and will be a valuable resource for those exploring the dynamics of innovations in microfinance.

This book analyses three key aspects of microfinancing, namely social purpose, commercialization and innovations and examines, through a global perspective, how these aspects helped and diverted microfinance institutions towards the attainment of their dual goals over the last twenty years. Since microfinance remains informal in nature for most economies, not all financial innovations are suitable for its needs. Hence, the arguments in the book put forth an important challenge to the advocates of innovations and subsequently highlight why MFIs should be cautious when integrating innovations to ensure its original promise. The book is based on empirical analysis by utilising the latest and global microfinance market data, rather than focusing on a specific region. Thus, the book bridges a gap in knowledge by unravelling detail of the social purpose, commercialization and innovations within the field of microfinance and will be a valuable resource for those exploring the dynamics of innovations in microfinance.