The Microfinance Business Model [electronic resource] : Enduring Subsidy and Modest Profit / Cull, Robert.

By: Cull, RobertContributor(s): Cull, Robert | Demirguc-Kunt, Asli | Morduch, JonathanMaterial type: TextTextPublication details: Washington, D.C. : The World Bank, 2016Description: 1 online resource (63 p.)Subject(s): Commercialization | Cost-Benefit Analysis | Gender | Implicit Subsidy | Microcredit | Nonprofit | PovertyAdditional physical formats: Cull, Robert: The Microfinance Business Model: Enduring Subsidy and Modest Profit.Online resources: Click here to access online Abstract: Recent evidence suggests only modest social and economic impacts of microfinance. Favorable cost-benefit ratios then depend on low costs. This paper uses proprietary data on 1,335 microfinance institutions between 2005 and 2009, jointly serving 80.1 million borrowers, to calculate the costs of microfinance and other elements of the microfinance business model. It calculates that on average, subsidies amounted to
Tags from this library: No tags from this library for this title. Log in to add tags.
    Average rating: 0.0 (0 votes)
No physical items for this record

Recent evidence suggests only modest social and economic impacts of microfinance. Favorable cost-benefit ratios then depend on low costs. This paper uses proprietary data on 1,335 microfinance institutions between 2005 and 2009, jointly serving 80.1 million borrowers, to calculate the costs of microfinance and other elements of the microfinance business model. It calculates that on average, subsidies amounted to 32 per borrower, but the distribution is highly skewed. The median microfinance institution used subsidies at a rate of just 6 per borrower, and no subsidy was used by the institution at the 25th percentile. These data suggest that, for some institutions, even modest benefits could yield impressive cost-benefit ratios. At the same time, the data show that the subsidy is large for some institutions. Counter to expectations, the most heavily-subsidized group of borrowers is customers of the most commercialized institutions, with an average of 75 per borrower and a median of 3. Customers of nongovernmental organizations, which focus on the poorest customers and women, receive a far smaller subsidy: the median microfinance nongovernmental organization used subsidy at a rate of 3 per borrower, and subsidy for the nongovernmental organization at the 25th percentile was just per borrower.

There are no comments on this title.

to post a comment.

Powered by Koha