Commercial Banks And Microfinance: Evolving Models Of Success

This document focuses on ways to open financial services access to low-income entrepreneurs. It outlines paradigms, approaches, and recommended actions that represent the consensus view among stakeholders.

Provision of financial services to low-income entrepreneurs may be the most effective way to reduce poverty and achieve broad-based economic growth. Yet, less than 2% of low-income entrepreneurs and producers have access to financial services from sources other than money lenders.

The paper presents recommendations to governments, financial institutions and international donors to address the challenge of financial inclusion. They include:

• Providing access instead of subsidies to clients;
• Supporting institutions instead of projects;
• Emphasizing savings and domestic resource mobilization;
• Providing financing that is appropriate for the institution;
• Utilizing second-tier institutions, where appropriate;
• Building the regulatory and incentive framework.