The microfinance revolution. implications for the role of the state

the microfinance revolution

The microfinance revolution. implications for the role of the state. Lapenu Cecile, Benoit-Cattin Michel. 1999. In. Innovations in microfinance for the rural poor. exchange of knowledge and implications for policy. proceedings. IFPRI. Feldafing. DSE. pp. 111-137. ISBN 3-934068-05-7

International workshop innovations in microfinance for the rural poor. exchange of knowledge and implications for policy. Accra, Ghana. 8 November 1998 /13 November 1998. Full text not available from this repository.

Abstract. This paper focuses on integration of microfinance into the rural financial system, because exclusion from classical financial services is of utmost importance in rural areas. A number of country case studies illustrate the role of the state in the development of the rural financial system. The countries use different modes of government intervention for microfinance innovations: microfinance is sometimes inegrated into the public sector (India, Viet Nam) ; it can be coplementary to state-owned institutions (Indonesia, Burkina Faso) ; or, it can be an alternative to the rather deficient role of the government (Madagascar, West Africa). The structure, conduct, and performance of both

the microfinance institutions and the financial systems must be analyzed and compared in order to understand the extent to which the public sector plays a justifiable role in the formation and development of institutions. What are the complementarities and trade-offs between public institutions and the private sector that can lead to an efficient rural financial system for the poor. In this paper, the evolution of theorical and empirical points of view on the role of the state in the financial system, from the interventionist period of the 1960s and 1970s to the current period of liberalization is presented. Then to understand when the state can directly promote, support, develop or even impede the development of microfinance, the respective roles of the state, the NGOs, and the private commercial banks in outreach and adoption of microfinance innovations are reviewed. For the indirect role of the state, different issues are analyzed regarding regulation of microfinance institutions, compared with commercial banks. Finally, what efficient direct and indirect roles can the state play in promoting MFI development are considered.

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