Pleading for Sustainable Microfinance on Both Sides of the Globe - National Strategies of Microfinance Develpment: Good Practices in Germany, India, Malaysia, and the Philippines

This paper highlights key issues that the author considers relevant for successful microfinance development in a number of countries in South and South East Asia, and Europe.

These country cases illustrate:

• The manner in which developing the financial system can aid micro-enterprise development and solve the problem of unemployment;
• Strategies to develop national microfinance industries, which serve macro economic objectives as well as the micro-level goals of sustainable industrial and innovative entrepreneurship.

According to the paper:

• The German case shows how reduced public funding for subsidized small enterprises, and increasing stress of competition in the banking sector, make innovative and creative finance imperative;
• The Indian case demonstrates that if policy and legal framework reforms do not keep pace with microfinance and rural finance development, it can result in systemic risk;
• The Malaysian case illustrates the shift from the old to the new paradigm, the transformation from traditional approaches that aimed to resolve perceived market failures to the new approach of improving performance at the level of financial institutions in delivering services more effectively to low-income households;
• The Phillipino case shows that success stories of the liberalized financial market, complemented by the right mix of reforms which enhance the economic environment, may enable a greater degree of entrepreneurial activity and reduced poverty.