Microfinance and public policy. Outreach, performance and efficiency.

The goal of microfinance institutions (MFIs) is to help the poor to cope better with risk, take advantage of small income generating opportunities and empower themselves through organization. To have this impact on an increasing number of people MFIs need to be financially sound and sustainable. This volume argues that while there may be situations where MFIs can go up-scale and thus meet both objectives at the same time, there are other market configurations where it is very difficult or even impossible for an institution to break even, no matter how efficiently it runs its operations. This is particularly the case in rural, remote and sparsely populated areas.

To take account of the variety of market and contextual constraints, this book argues that public policy should be guided by efficiency, being an overarching criterion accommodating different combinations of financial performance and social impact. A valuable contribution to the debate surrounding the performance and sustainability of microfinance, this volume examines the concept of efficiency in financial intermediation, how it is measured and how public policy can be geared to provide incentives to efficiency gains. The argument is illustrated by an empirical analysis of 45 MFIs from around the world.

This is a co-publication with Palgrave Macmillan Publishers.