The Commercialization of Microfinance: International Experiences

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The Commercialization of Microfinance
International Experiences

Marguerite S. Robinson Institute Fellow Emeritus
HIID, Harvard University Fifth Annual Conference
of Microfinance Institutions in CEE and the
NIS Budapest, Hungary May 17, 2002
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WHAT IS COMMERCIAL MICROFINANCE?

• Small-scale financial services primarily
  credit and voluntary savings
• Provided by competing regulated
  financially-self-sufficient institutions
• To economically active poor peoplemen and
  women, rural and urban.
• 
  
  ? In its most advanced form, all microloans are
  fully financed by savings, commercial debt,
  for-profit investment, and retained earnings (in
  a variety of forms and combinations).

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WHO ARE THE CLIENTS?

• BORROWERS economically active poor and
  lower-middle income people
• who farm or fish or herd
• who operate microenterprises where goods are
  produced, repaired, recycled or sold
• who provide services or work for wages or
  commissions.
• SAVERS people of all income levels who live or
  work near a branch or unit of the financial
  institution.

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WHO ARE THE ECONOMICALLY ACTIVE POOR?

• People who have some form of employment and are
  not severely food-deficit or destitute.
• People who save in small increments.
• People who can repay a small loan at an interest
  rate that enables the lending institution to be
  financially self sufficient.

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THE NEW PARADIGMTHE FINANCIAL SYSTEMS APPROACH
TO MICROFINANCE

• ? CREDIT

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THE NEW PARADIGMTHE FINANCIAL SYSTEMS APPROACH
TO MICROFINANCE

• ? SAVINGS

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All MFIs and Financially Self-Sufficient (FSS)
MFIs Selected Indicators from The MicroBanking
Bulletin, November 2001

• Indicators 1-3

1 Averages are calculated on the basis of the
values between the 2nd and 9th deciles. 2
Averages are calculated by dropping the top and
bottom observations.
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All MFIs and Financially Self-Sufficient (FSS)
MFIs Selected Indicators

• Indicators 4-6

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All MFIs and Financially Self-Sufficient (FSS)
MFIs Selected Indicators

• Indicators 7-10

3 Adjusted net operating income/average total
assets. Adjustments are made for inflation,
subsidies, and loan loss provision. 4
Outstanding balance of loans overdue over 90
days/total gross loan portfolio.
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