The Microfinance Industry

In this paper the microfinance industry will be described, both as it is today and with historical perspectives. Brief history of past failure of subsidized loans is mentioned. Different but important contributions from Stiglitz and Yunnus are explained and then the microfinance industry´s growth and current state will be described. Finally, different microfinance institutions types are explained. The microfinance industry is peculiar and deserves to be researched and focused upon for several reasons. The most important is that it aims towards poverty reduction by reaching out to the poor and provide them with capital. Noteworthy, that is to be done in a sustainable way, which allows the industry to thrive and expand. Indeed it has expanded greatly over the last few years. While the microfinance industry expands the importance of understanding the industry becomes ever more important. Researches on corporate governance for microfinance institutions have been carried out but more researches are needed, in particular for the social goal called outreach. Because the microfinance institutions have both social goals and financial goals, the microfinance industry is different from most other industries where profit maximization is the main and often the only goal. The corporate governance findings for microfinance industry may therefore be different and may not be easily transferred to other industries.