Unsubsidized Microfinance Institutions

Abstract

This paper starts from the observation that 23% of the world's microfinance institutions (MFIs) manage without subsidies. We examine how unsubsidized institutions cope with their social mission. Overall, the lack of subsidies worsens social performances. However, our results show that strategies to achieve financial self-sufficiency differ substantially across regions. African and Asian MFIs compensate for non-subsidization by charging higher interest rates. In Eastern Europe and Central Asia, unsubsidized MFIs find it more suitable to target less poor clients. Unsubsidized Latin American MFIs tend to reduce their share of female borrowers. ; info:eu-repo/semantics/nonPublished