Microfinance and rural development: a long-term perspective

H.A.J. Moll

Research output: Contribution to journalArticleProfessional

Abstract

The long-term perspective on microfinance starts with a discussion of three central issues: first, views and policies, with two opposing views: "credit for target group" and "pushing the financial frontier"; second, the performance of microfinance institutions measured via two objectives: outreach and financial sustainability; third, microfinance and rural development. This latter issue is approached through analyses of the effects of financial services on rural households and analyses of long term national financial development. Both micro and macro studies show positive effects of an expansion of savings and lending services, financial deepening. The negative side of financial deepening, the apparently unavoidable occurrence of bank insolvancies, is also reviewed. The concluding section argues that the microfinance sector should be guided by "stability and expansion": stability to withstand shocks and to maintain the relationships established between rural households and microfinance institutions, and expansion to include more people within the financial frontier.
Original languageEnglish
Pages (from-to)13-31
JournalJournal of Microfinance
Volume7
Issue number2
Publication statusPublished - 2006

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