Microfinance Tradeoffs : Regulation, Competition, and Financing

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.

Bibliographic Details

Main Authors:	Cull, Robert, Demirgüç-Kunt, Asli, Morduch, Jonathan
Language:	English
Published:	2009-10-01
Subjects:	ACCESS TO FINANCE, ACCOUNTING, ADMINISTRATIVE BURDENS, ADVERSE SELECTION, AFFILIATE, ALLOCATION OF CAPITAL, ASYMMETRIC INFORMATION, BANK BRANCHES, BANK POLICY, BANKING SECTOR, BANKING SERVICES, BANKS, BORROWER, BORROWING, CAPITAL COSTS, CAPITAL MARKETS, COLLATERAL, COMMERCIAL BANKS, COMMERCIAL FUNDING, COMMERCIAL LENDERS, COMMERCIAL LENDING, COMMERCIAL TERMS, CONFIDENTIALITY, COST OF CAPITAL, COST OF FUNDS, CREDIT BUREAUS, CREDIT MARKET, DELINQUENCY RATES, DEMAND FOR CREDIT, DEPOSIT, DEPOSIT ACCOUNTS, DEPOSIT RATE, DEPOSIT-TAKING INSTITUTIONS, DEPOSITS, DEVELOPING COUNTRIES, DOUBLE BOTTOM LINE, DUMMY VARIABLES, ENTREPRENEURS, FEMALE CLIENTS, FINANCIAL ACCESS, FINANCIAL DATA, FINANCIAL INFORMATION, FINANCIAL INSTITUTIONS, FINANCIAL PERFORMANCE, FINANCIAL RATIOS, FINANCIAL RETURNS, FINANCIAL SELF-SUFFICIENCY, FINANCIAL SELF-SUSTAINABILITY, FINANCIAL SERVICES, FINANCIAL SUSTAINABILITY, FUNDING SOURCES, GOVERNANCE INDICATORS, GRAMEEN BANK, GROWTH RATE, HOUSEHOLDS, IMPLICIT SUBSIDIES, INCOME, INCOME DISTRIBUTION, INCOME LEVELS, INFLATION, INFORMATION ASYMMETRIES, INSTITUTIONAL DEVELOPMENT, INSURANCE, INTEREST RATE, INTEREST RATES, INTEREST RATES ON LOANS, INTERNATIONAL BANK, INTERNATIONAL BANKING, INTERNATIONAL FINANCIAL STATISTICS, JOINT LIABILITY, LABOR COSTS, LENDER, LENDING AGREEMENTS, LOAN, LOAN DELINQUENCIES, LOAN DELINQUENCY, LOAN PORTFOLIO, LOAN PORTFOLIOS, LOAN QUALITY, LOAN REPAYMENT, LOAN REPAYMENT RATES, LOAN SIZE, LOAN SIZES, MARKET FAILURES, MARKET INFORMATION, MARKET MECHANISM, MEASURES OF PROFITABILITY, MFI, MICROBANKING, MICROCREDIT, MICROFINANCE, MICROFINANCE INSTITUTION, MICROFINANCE INSTITUTIONS, MICROFINANCE PRACTITIONERS, MICROFINANCE SECTOR, MOBILE BANKING, MONETARY FUND, MORAL HAZARD, NONBANK FINANCIAL INSTITUTIONS, OPEN MARKET, OPERATING COST, OPERATING COSTS, OPPORTUNITY COST, OUTREACH, OWNERSHIP STRUCTURE, POOR BORROWERS, POOR HOUSEHOLDS, PORTFOLIO QUALITY, PROFITABILITY, PRUDENTIAL REGULATION, PRUDENTIAL SUPERVISION, PUBLIC OFFERING, RATES OF INTEREST, REGULATOR, REGULATORS, REGULATORY AUTHORITY, REGULATORY ENVIRONMENT, REMITTANCE, REMITTANCE SERVICES, RETURN, RETURN ON ASSETS, RETURN ON EQUITY, RETURNS, RISK SHARING, SAVINGS, SMALL LOANS, SOURCE OF FUNDS, SUBSIDIZATION, TRANSACTION, TRANSACTION COSTS, TRANSACTIONS COSTS, VILLAGE, VILLAGE BANKS, WOMEN BORROWERS,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20091021111857 https://hdl.handle.net/10986/4278
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