"Microfinance Meets the Market," just published in the Journal of Economic Perspectives, advances the debate, presenting new research from Jonathan Morduch of the Financial Access Initiative, housed at New York University's Wagner Graduate School of Public Service, and Robert Cull and Asli Demirgüç-Kunt of the World Bank. The research reveals complementary paths to a successful expansion of the microfinance industry.
"Arguing for a purely nonprofit or commercial approach to global microfinance services misses the point and limits the opportunities to reach a significantly broader population," commented Professor Morduch. "We shouldn't be choosing sides. By embracing both NGO and commercial options we can leverage innovation to drive down costs and expand access."
Roughly 40-to-80 percent of the populations in most developing economies lack access to formal banking services. There is general agreement that access to reliable financial services could improve the lives of hundreds of millions, perhaps billions, of low-income people currently without access to banks.
In examining 346 of the world's leading microfinance organizations covering 18 million borrowers, the research presented in "Microfinance Meets the Market" reveals that while commercialization is a powerful trend, commercial banks such as Mexico's Compartamos and avowedly "social businesses" like Grameen Bank are not substitutes for each other. Each has benefits and limitations.
Commercial microfinance banks, as a group, make loans that on average are about four times larger than loans from non-governmental organizations (NGOs). Since poorer customers generally demand smaller loans, average loan size is a rough proxy for the poverty level of customers. Microfinance banks tend to serve a substantially better-off group of borrowers than do NGOs, and banks also serve fewer women as a share of their customers.
While many NGOs do in fact earn profits from their microfinance activities, investors seeking only financial returns would have little interest in most of the institutions serving poorer customers. Commercial investment is necessary to fund the continued expansion of microfinance, but institutions with strong social missions, many taking advantage of subsidies, remain best placed to reach and serve the poorest customers and some are doing so at massive scale. The paper shows that social investors, foundations, and public agencies remain an important part of the microfinance equation.
About the Financial Access Initiative:
The Financial Access Initiative (FAI) is a consortium of leading development economists focused on substantially expanding access to quality financial services for low-income individuals, offering the next generation of thinking about microfinance. FAI is housed at the Wagner Graduate School of Public Service at New York University and led by managing director Jonathan Morduch and directors Dean Karlan (Yale University) and Sendhil Mullainathan (Harvard University). FAI focuses on basic research and measurement tools that reveal the most effective means of implementing microfinance initiatives. FAI studies the value of microfinance by identifying the demand for financial services; the impact of financial access on incomes, businesses, and broader aspects of well-being; and mechanisms that can increase impact and scale of microfinance.
Frugal Innovations: when less is more
19.04.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO
Europe's microtechnology industry is attuned to growth
10.03.2017 | IVAM Fachverband für Mikrotechnik
Staphylococcus aureus is a feared pathogen (MRSA, multi-resistant S. aureus) due to frequent resistances against many antibiotics, especially in hospital infections. Researchers at the Paul-Ehrlich-Institut have identified immunological processes that prevent a successful immune response directed against the pathogenic agent. The delivery of bacterial proteins with RNA adjuvant or messenger RNA (mRNA) into immune cells allows the re-direction of the immune response towards an active defense against S. aureus. This could be of significant importance for the development of an effective vaccine. PLOS Pathogens has published these research results online on 25 May 2017.
Staphylococcus aureus (S. aureus) is a bacterium that colonizes by far more than half of the skin and the mucosa of adults, usually without causing infections....
Physicists from the University of Würzburg are capable of generating identical looking single light particles at the push of a button. Two new studies now demonstrate the potential this method holds.
The quantum computer has fuelled the imagination of scientists for decades: It is based on fundamentally different phenomena than a conventional computer....
An international team of physicists has monitored the scattering behaviour of electrons in a non-conducting material in real-time. Their insights could be beneficial for radiotherapy.
We can refer to electrons in non-conducting materials as ‘sluggish’. Typically, they remain fixed in a location, deep inside an atomic composite. It is hence...
Two-dimensional magnetic structures are regarded as a promising material for new types of data storage, since the magnetic properties of individual molecular building blocks can be investigated and modified. For the first time, researchers have now produced a wafer-thin ferrimagnet, in which molecules with different magnetic centers arrange themselves on a gold surface to form a checkerboard pattern. Scientists at the Swiss Nanoscience Institute at the University of Basel and the Paul Scherrer Institute published their findings in the journal Nature Communications.
Ferrimagnets are composed of two centers which are magnetized at different strengths and point in opposing directions. Two-dimensional, quasi-flat ferrimagnets...
An Australian-Chinese research team has created the world's thinnest hologram, paving the way towards the integration of 3D holography into everyday...
24.05.2017 | Event News
23.05.2017 | Event News
22.05.2017 | Event News
26.05.2017 | Life Sciences
26.05.2017 | Life Sciences
26.05.2017 | Physics and Astronomy