About Microfinance

Microfinance is increasingly attracting the attention of academic researchers, financial institutions, and the general public. Microfinance addresses the provision of financial services to individuals who have no or incomplete access to the formal financial sector due to their socio-economic status. While in the beginning microfinance institutions (MFIs) were mainly offering loans to microentrepreneurs, today microfinance stands for a broader range of products and services offered to a broader range of clients by a variety of suppliers. Sometimes described as “inclusive finance”, microfinance includes small-scale loans to entrepreneurs as well as low-income savings, insurance products, transfer services, etc.

The rapid development of microfinance during the last decades is reflected in the vast increase in the number of MFIs, the number of clients and the aggregate loan portfolios of MFIs. The formation of institutions offering socially responsible investment funding to an increasing number of interested private and institutional investors, and the growing amount of international monetary flows towards MFIs suggest that microfinance is a striking field for private and institutional investors. In this growing industry, the value chain of players is becoming increasingly complex, and requires measuring and monitoring of financial and social performance of all players. Not least, academic research has put forth considerable effort in the theoretical and empirical investigation of microfinance.