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Over the past five years, the microcredit sector has experienced unprecedented growth. The number of borrowers served by microfinance institutions (MFIs) has increased threefold to reach 120 million clients.
Ever since microcredit first began to capture public attention 25 years ago, the usual story line has been that it is a tool of extraordinary power to lift poor people—especially women—out of poverty, by funding their microenterprises and raising their incomes.
Over the past two decades, institutions that make microloans to low-income borrowers in developing and transition economies have focused increasingly on making their operations financially sustainable by charging interest rates that are high enough to cover all their costs.
This four-day course helps microfinance institutions develop and improve the quality of their own risk management processes and focuses on problem prevention and early problem identification and control.
This Brief provides examples that show that the reasons for differences in interest rates can be manifold and often tend to be highly country specific.
In many countries, including Uganda, Bangladesh, and Bolivia, microfinance has become more competitive in recent years. Competition is generally expected to benefit consumers by offering a wider choice of appropriate products and providers, better service, and lower prices.
This Donor Brief addresses how donors can support savings and credit cooperatives to increase access to financial services. It highlights the advantages of working with these groups as well as some of the unique challenges of doing so.
Designed as inputs to larger projects with limited life spans, credit components run the risk of failing to provide the intended target groups with permanent access to financial services. This Donor Brief outlines some ways to make the most of credit components and minimize their downsides.
This Occasional Paper explains how a microfinance institution (MFI) should estimate the interest rate on its loans if the institution wants to become sustainable; how to calculate the effective interest yield on loans; and what different loan and repayment methods are used to determine the true rate of interest income received by an MFI. This Occasional Paper also discusses evidence that MFI clients are capable of paying high interest rates, concluding that MFIs should be able to cover their costs.
Savings are often the only way poor people can manage to pay for a major life event (such as a marriage or funeral), survive a natural disaster, or take advantage of a business opportunity. This Donor Brief outlines what donors can do to support savings services that help poor people improve their lives.