From Revolution to Evolution: Charting the Main Features of Microfinance 2.0

Abstract:     
The past thirty years or so has seen microfinance take off from small group-based lending experiments to several thousand financial service providers (FSPs) serving a growing portion of the developing world today. Nevertheless, the challenge to improve broadbased access to financial services - going beyond credit and into other products such as savings, insurance and money transfer services - remains. Where is the microfinance industry headed? This essay reviews the available evidence, and argues that both the public and private spheres are crucial to the continued dynamism and expansion of the microfinance industry - the private sector as a continued source of product and process innovations; and the public sector taking on a strong market enabling and development role.

Keywords: microfinance, market failures, information, innovation

JEL Classifications: D52, O31, Q13

Working Paper Series