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Prospects, problems and potential of credit-granting NGOs


  • Reinhard H. Schmidt

    (J.W. Goethe-Universit├Ąt, Frankfurt)

  • Claus-Peter Zeitinger

    (Internationale Projekt Consult Frankfurt)


Recently NGOs have begun to be regarded as ideal providers of credit to small and micro businesses. The paper investigates whether this claim is justified and how the co-operation between donor institutions and NGOs should be structured. It reports the main results of an empirical investigation of the financial efficiency of credit-granting NGOs. These results cast serious doubts on the ability of NGOs to be viable institutions and lead the authors to suggest an institution-building approach of co-operating with NGOs as a promising alternative. Such an approach requires that donors assume a much more active role than they have played up to now.

Suggested Citation

  • Reinhard H. Schmidt & Claus-Peter Zeitinger, 1996. "Prospects, problems and potential of credit-granting NGOs," Journal of International Development, John Wiley & Sons, Ltd., vol. 8(2), pages 241-258.
  • Handle: RePEc:wly:jintdv:v:8:y:1996:i:2:p:241-258 DOI: 10.1002/(SICI)1099-1328(199603)8:2<241::AID-JID369>3.0.CO;2-R

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    References listed on IDEAS

    1. Bates, Robert H & Collier, Paul, 1995. "The Politics and Economics of Policy Reform in Zambia," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 4(1), pages 115-143, May.
    2. Hawkins, Jeffrey Jr., 1991. "Understanding the failure of IMF reform: The Zambian case," World Development, Elsevier, vol. 19(7), pages 839-849, July.
    3. Wade, Robert, 1985. "The market for public office: Why the Indian state is not better at development," World Development, Elsevier, vol. 13(4), pages 467-497, April.
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    Cited by:

    1. Navajas, Sergio & Schreiner, Mark, 1998. "Apex Organizations And The Growth Of Microfinance In Bolivia," Economics and Sociology Occasional Papers 28324, Ohio State University, Department of Agricultural, Environmental and Development Economics.
    2. Gonzalez-Vega, Claudio & Schreiner, Mark & Meyer, Richard L. & Rodriguez-Meza, Jorge & Navajas, Sergio, 1996. "Bancosol: The Challenge Of Growth For Microfinance Organizations," Economics and Sociology Occasional Papers 28333, Ohio State University, Department of Agricultural, Environmental and Development Economics.
    3. Gonzalez-Vega, Claudio & Meyer, Richard L. & Navajas, Sergio & Schreiner, Mark & Rodriguez-Meza, Jorge & Monje, Guillermo F., 1996. "Microfinance Market Niches And Client Profiles In Bolivia," Economics and Sociology Occasional Papers 28332, Ohio State University, Department of Agricultural, Environmental and Development Economics.
    4. Wolday, Amha, 2004. "Managing growth of microfinance institutions (MFIs): balancing sustainability and reaching large number of clients in Ethiopia," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 13(2).
    5. Schreiner, Mark, 1997. "Ways Donors Can Help The Evolution Of Sustainable Microfinance Organizations," Economics and Sociology Occasional Papers 28327, Ohio State University, Department of Agricultural, Environmental and Development Economics.
    6. White, Robert & Eicher, Carl K., 1999. "Ngo'S And The African Farmer: A Skeptical Perspective," Staff Papers 11532, Michigan State University, Department of Agricultural, Food, and Resource Economics.

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