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The strange neglect of diversity within microfinance institutions

This blog is Dan Brockington’s highlights on how the branch performance in BRAC-Tanzania varies considerably and seemed to reflect the influence of strong or weak area managers. He notes that this diversity of performance within microfinance organizations matters—it has been neglected and this could cause problems later.

Microfinance was intended to be revolutionary since it promised to tackle a poor household’s inability to access money in times of need. The poor would be able to access small lump sum loans by calling upon their friends and relatives to act as guarantors. This research explores how the promise of microfinance remains unfulfilled in two respects—operations and profit. We discuss the importance of heterogeneity and diversity of performance within microfinance organizations and an MFI’s approach to identify prospective clients.

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jayan-nair

Dan Brockington