Issues Related to Microfinance: Sustainability and Impact Evaluation
Microfinanceis the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services. More broadly, it is a movement whose object is "a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance, and fund transfers."
By 2015 it is expected that institutional and individual investments in microfinance will rise sharply to around USD 20 bn. Globally it is estimated that over 10,000 MFIs exist in the form of Credit Unions, NGOs, Cooperatives, Government Agencies, Private and Commercial banks and various permutations of these forms.
MFIs face a double challenge: not only do they have to provide financial services to the poor, but they also have to cover their cost to avoid bankruptcy and consequently MFIs mainly depend on subsidies. The MIX 2006 benchmark data set of 704 MFIs reveals that 41% are not financially sustainable and rely on donor support to keep afloat. Hence a deeper understanding of the true costs associated with subsidization of microfinance to the society, the determinants of subsidies and its impact on the financial and social efficiency of microfinance are required in order to evaluate the role of subsidies in the performance of the MFIs.
Very few have focused the sustainability and measuring the performance of MFIs. In order to cover this gap this study will contribute to scarce empirical literature.
|Projektleitung:||Prof. Dr. Awudu Abdulai|
|Bearbeitung:||Sohail Makhdum, MSc.|