IDEAS home Printed from https://ideas.repec.org/b/fpr/ifprib/0801871484.html
   My bibliography  Save this book

The triangle of microfinance: Financial sustainability, outreach, and impact

Editor

Listed:
  • Zeller, Manfred
  • Meyer, Richard L.

Abstract

The initial success of microfinance programs in the 1970s led pioneers to think that many essential problems of the poor might be resolved by access to credit alone -- the ability to acquire assets, to start businesses, to finance emergency needs and to insure against illness and disaster. Part of that vision has certainly been realized. But much remains to be done. Most microfinance institutions (MFIs) are still small and vulnerable to constraints on their resources and to the risks inherent in single-issue portfolios. Most depend upon donors and governments to remain in operation. There is much waste and duplication, and some mature programs have declining loan recovery rates, even as competition for borrowers rises from conventional banks and finance companies. Analyzing the failures of credit programs aimed at small farmers and the successes of other programs showed the need for new understanding of the ways that poor households make spending, borrowing, and saving decisions. This area was previously neglected in policymaking on food security issues. The International Food Policy Research Institute (IFPRI) supported household surveys in nine Asian and African countries during the 1990s that analyzed formal and informal financial transactions, and it also evaluated the success of innovative approaches at some MFIs. The overall goal was to clarify the conditions under which state investment in microfinance programs might improve life for poor people more than state investment of the same funds in education, health, nutrition, or infrastructure development. The research led to the concept of the critical triangle of microfinance" -- the need for any MFI to manage simultaneously the problems of outreach (reaching the poor both in terms of numbers and depth of poverty), financial sustainability (meeting operating and financial costs over the long term), and impact (having discernible effect upon clients' quality of life). This book elaborates on these objectives and shows that the most successful MFIs expand all sides of that triangle. Tradeoffs are sometimes inevitable, but even so, synergies among the three make the concept valuable.

Suggested Citation

  • Zeller, Manfred & Meyer, Richard L. (ed.), 2002. "The triangle of microfinance: Financial sustainability, outreach, and impact," IFPRI books, International Food Policy Research Institute (IFPRI), number 0-8018-7148-4.
    • Handle: RePEc:fpr:ifprib:0801871484
    as

    Download full text from publisher

    File URL: http://www.ifpri.org/sites/default/files/publications/the_triangle_of_microfinance_financial_sustainability_outreach_and_impact.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sharma, Manohar, 2000. "Microfinance," MP05 briefs 0, International Food Policy Research Institute (IFPRI).
    2. Zeller, Manfred & Schrieder, Gertrud & von Braun, Joachim & Heidhues, Franz, 1997. "Rural finance for food security for the poor," Food policy reviews 4, International Food Policy Research Institute (IFPRI).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mirko Bendig & Thankom Arun, 2011. "Microfinancial Services And Risk Management: Evidences From Sri Lanka," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 36(4), pages 97-126, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nordjo, R. & Adjasi, C., 2018. "The Impact of Finance on Welfare of Smallholder Farm Household in Ghana," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277142, International Association of Agricultural Economists.
    2. Richard L. Meyer, 2002. "The demand for flexible microfinance products: lessons from Bangladesh," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(3), pages 351-368.
    3. Dufhues, T. & Buchenrieder, G., 2004. "Der Beitrag der Conjoint Analyse zur nachfrageorintierten Entwicklung des ländlichen Finanzsektors in Vietnam," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 39.
    4. Renata Baborska & Emilio Hernandez & Emiliano Magrini & Cristian Morales-Opazo, 2020. "The impact of financial inclusion on rural food security experience: A perspective from low-and middle-income countries," Review of Development Finance Journal, Chartered Institute of Development Finance, vol. 10(2), pages 1-18.
    5. Arun, Thankom Gopinath & Bendig, Mirko, 2010. "Risk Management among the Poor: The Case of Microfinancial Services," IZA Discussion Papers 5174, Institute of Labor Economics (IZA).
    6. Sabina Alkire & Maria Emma Santos, 2010. "Acute Multidimensional Poverty: A New Index for Developing Countries," Human Development Research Papers (2009 to present) HDRP-2010-11, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
    7. Allen Blackman, 2001. "Why don't Lenders Finance High-Return Technological Change in Developing-Country Agriculture?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(4), pages 1024-1035.
    8. Basu, Karna & Wong, Maisy, 2015. "Evaluating seasonal food storage and credit programs in east Indonesia," Journal of Development Economics, Elsevier, vol. 115(C), pages 200-216.
    9. Muriithi, Beatrice W. & Matz, Julia Anna, 2015. "Welfare effects of vegetable commercialization: Evidence from smallholder producers in Kenya," Food Policy, Elsevier, vol. 50(C), pages 80-91.
    10. Christopher B. Barrett, 2005. "Rural poverty dynamics: development policy implications," Agricultural Economics, International Association of Agricultural Economists, vol. 32(s1), pages 45-60, January.
    11. De Janvry, Alain & Sadoulet, Elisabeth & Murgai, Rinku, 2002. "Rural development and rural policy," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 2, chapter 31, pages 1593-1658, Elsevier.
    12. Shalik Ram Sharma, 2003. "Microfinance Against Poverty : The Nepalese Scenario," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 15, pages 166-190, April.
    13. Richard L Meyer, 2009. "Track Record of Financial Institutions in Assisting the Poor in Asia," Working Papers id:2284, eSocialSciences.
    14. Quisumbing, Agnes R. & McClafferty, Bonnie, 2006. "Using gender research in development: food security in practice," Food security in practice technical guide series 2, International Food Policy Research Institute (IFPRI).
    15. Aneel Karnani, 2006. "Mirage at the Bottom of the Pyramid," William Davidson Institute Working Papers Series wp835, William Davidson Institute at the University of Michigan.
    16. Hargreaves, James R. & Morison, Linda A. & Gear, John S.S. & Makhubele, Mzamani B. & Porter, John D.H. & Busza, Joanna & Watts, Charlotte & Kim, Julia C. & Pronyk, Paul M., 2007. ""Hearing the Voices of the Poor": Assigning Poverty Lines on the Basis of Local Perceptions of Poverty. A Quantitative Analysis of Qualitative Data from Participatory Wealth Ranking in Rural," World Development, Elsevier, vol. 35(2), pages 212-229, February.
    17. Cécile Lapenu & Manfred Zeller & Martin Greely & Renée Chao-Béroff & Koenraad Verhagen, 2004. "Performances sociales : Une raison d'être des institutions de microfinance et pourtant encore peu mesurées. Quelques pistes," Mondes en développement, De Boeck Université, vol. 126(2), pages 51-68.
    18. Bendig, Mirko & Arun, Thankom Gopinath, 2011. "Enrolment in Micro Life and Health Insurance: Evidences from Sri Lanka," IZA Discussion Papers 5427, Institute of Labor Economics (IZA).
    19. Machiko Nissanke, 2002. "Donors' Support for Microcredit as Social Enterprise: A Critical Reappraisal," WIDER Working Paper Series DP2002-127, World Institute for Development Economic Research (UNU-WIDER).
    20. Zeller, Manfred & Ahmed, Akhter U. & Babu, Suresh Chandra & Broca, Sumiter S. & Diagne, Aliou & Sharma, Manohar, 1996. "Rural finance policies for food security of the poor," FCND discussion papers 11, International Food Policy Research Institute (IFPRI).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fpr:ifprib:0801871484. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/ifprius.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.