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Developmental Impact and Coexistence of Sustainable and Charitable Microfinance Institutions: Analysing BancoSol and Grameen Bank

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  • Jessica Schicks

Abstract

Based on the current discussion of the development of a commercial market segment of Microfinance Institutions (MFIs), this paper evaluates the developmental impact of charitable MFIs that rely on subsidies in comparison with sustainable MFIs that operate independently from grant funding. BancoSol from Bolivia serves as a case study of a sustainable MFI. Grameen Bank from Bangladesh represents a charitable MFI. The case studies confirm both the theoretical arguments for sustainable MFIs promoted by the institutionist approach to microfinance and the arguments for charitable MFIs advocated by the welfarist approach. The paper argues that both kinds of MFIs are justified and should continue to coexist. The second part of the paper suggests institutional solutions to facilitate the coexistence of both types of MFIs. Cet article repose sur le débat actuel portant sur le développement d'un segment de marché commercial des institutions de microfinances (IMF). Il évalue les impacts respectifs sur le développement des IMF qui dépendent de subventions et de celles qui en sont indépendantes. La Bancosol de Bolivie représente un exemple d'IMF durable (sustainable MFI) et la Grameen bank du Bangladesh un exemple d'IMF caritative (charitable MFI). Les études de cas confirment à la fois les arguments théoriques, sur les IMF durables appuyés par l'approche 'institutionniste' et les arguments sur les IMF caritatives appuyés par l'approche en termes d'Etat providence. L'article justifie les deux types d'IMF et la nécessité de leur coexistence. La seconde partie de l'article suggère des solutions institutionnelles destinées à faciliter la coexistence de ces deux types d'IMF.

Suggested Citation

  • Jessica Schicks, 2007. "Developmental Impact and Coexistence of Sustainable and Charitable Microfinance Institutions: Analysing BancoSol and Grameen Bank," The European Journal of Development Research, Taylor and Francis Journals, vol. 19(4), pages 551-568.
  • Handle: RePEc:taf:eurjdr:v:19:y:2007:i:4:p:551-568
    DOI: 10.1080/09578810701667573
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    Cited by:

    1. Sheremenko, Ganna & Escalante, Cesar L. & Florkowski, Wojciech J., 2012. "The Universality of Microfinance Operations Model in Eastern Europe and Central Asia: Financial Sustainability vs. Poverty Outreach," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 123286, Agricultural and Applied Economics Association.
    2. Ganna Sheremenko & Cesar L Escalante & Wojciech J Florkowski, 2017. "Financial Sustainability and Poverty Outreach: The Case of Microfinance Institutions in Eastern Europe and Central Asia," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 29(1), pages 230-245, January.
    3. Sheremenko, Ganna & Escalante, Cesar L. & Florkowski, Wojciech J., 2012. "The Road to Financial Sustainability. Comparative Analysis of Russia and the Caucasus Region," 2012 Annual Meeting, February 4-7, 2012, Birmingham, Alabama 119525, Southern Agricultural Economics Association.
    4. Baldi, Guido & Sadovskis, Vairis & Šipilova, Viktorija, 2014. "Economic and Employment Effects of Microloans in a Transition Country," MPRA Paper 52736, University Library of Munich, Germany.
    5. JJ. Cao-Alvira & LG Deidda, 2013. "Financial liberalization and the development of microcredit," Working Paper CRENoS 201324, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.

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