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Strategies For Risk Diversification In Microfinance Institutions And Their Impact On The Resilience Of The Sector In The Republic Of Moldova

Author

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  • POPA, Viorica

    (National Institute for Economic Research, AESM, Chisinau, Republic of Moldova)

Abstract

Microfinance institutions (MFIs) play a crucial role in promoting financial inclusion and supporting vulnerable groups in the Republic of Moldova. However, the sector faces multiple challenges related to credit risk concentration, liquidity fluctuations, regulatory pressures, and macroeconomic instability. This paper analyzes the strategies of risk diversification applied by MFIs and assesses their contribution to strengthening sectoral resilience. Particular attention is given to the impact of innovative financing mechanisms, such as blended finance and guarantee schemes, in reducing vulnerability to external shocks. Empirical evidence from the Moldovan microfinance market indicates that institutions with a diversified risk management framework demonstrate higher financial stability, lower default rates, and greater adaptability to crises. The findings suggest that fostering risk diversification strategies not only enhances the sustainability of microfinance institutions but also contributes to the resilience of the national financial system as a whole. The article was developed within the framework of Subprogram 030101 „Strengthening the resilience, competitiveness, and sustainability of the economy of the Republic of Moldova in the context of the accession process to the European Union†, institutional funding.

Suggested Citation

  • POPA, Viorica, 2025. "Strategies For Risk Diversification In Microfinance Institutions And Their Impact On The Resilience Of The Sector In The Republic Of Moldova," Journal of Financial and Monetary Economics, Centre of Financial and Monetary Research "Victor Slavescu", vol. 13(1), pages 145-155, October.
    • Handle: RePEc:vls:rojfme:v:13:y:2025:i:1:p:145-155
    DOI: https://doi.org/10.65672/jfme.2025.1.13
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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