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Bridging the “Missing Middle” between Microfinance and Small and Medium-Sized Enterprise Finance in South Asia

Author

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  • Shankar, Savita

    (Asian Development Bank Institute)

Abstract

With maturity in the microfinance market in South Asia, it is observed that some microfinance members’ needs grow beyond the boundaries of traditional microfinance group loans. In addition, there are other small enterprises whose needs are not met by microfinance institutions or commercial banks. It is important to address the financing needs of these firms given their employment potential, and hence this issue is on the policy agenda of the three countries studied in this paper: India, Bangladesh, and Pakistan. Drawing on interviews with chief executives of lending organizations and desk research, this paper reviews the options currently available to such firms in each country, the lending models being used, and recent policy initiatives to promote them. Based on the country experiences, the features of successful lending models for this segment and the specific challenges that need to be addressed are summarized and conclusions drawn.

Suggested Citation

  • Shankar, Savita, 2016. "Bridging the “Missing Middle” between Microfinance and Small and Medium-Sized Enterprise Finance in South Asia," ADBI Working Papers 587, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:0587
    as

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    References listed on IDEAS

    as
    1. Development Services, ACCESS & Nair, Tara S, 2014. "Inclusive Finance India Report 2014," OUP Catalogue, Oxford University Press, number 9780199458295, Decembrie.
    2. Ayyagari, Meghana & Beck, Thorsten & Demirguc-Kunt, Asl, 2003. "Small and medium enterprises across the globe : a new database," Policy Research Working Paper Series 3127, The World Bank.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    microfinance in South Asia; lending models; microfinance group loans; missing middle;
    All these keywords.

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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