Synergies through linkages: Who benefits from linking micro-finance and business development services?

This Article was published as it appears here in World Development Vol 35, No 8, pp. 1341-1398 © Elsevier Ltd.

This article in World Development takes a fresh look at how finance and BDS can be linked without jeopardizing the effectiveness of either service. The central hypothesis is that MSEs in developing countries can benefit from linking finance and BDS. It is recognized, however, that this will only happen if the providers of finance and BDS also benefit from the linkage. The paper considers, therefore, the costs and benefits of linking for three main groups of actors: MSEs, financial service providers; and BDS providers.
The paper reviews 25 examples of linked provision, and summarises the main costs and benefits for the actors involved. It finds that there can be major benefits, especially for those MSEs that gain access to additional services that are essential for their growth. In addition, a six-part typology of linked service provision is proposed, based on whether the linkage is voluntary or compulsory for the client and whether delivery is provided through one unified department of an organization, through parallel departments, or through separate partner organizations.