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Library » Commercialization in Microfinance - A Study of Profitability, Outreach and Success Factors within the Latin American Context

Commercialization in Microfinance - A Study of Profitability, Outreach and Success Factors within the Latin American Context
Sep 2009, Dacheva, P.
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Understanding the effect of commercialization

This paper examines the effects of commercialization on the profitability and outreach of MFIs in Latin America.

The recent shift towards commercialization of microfinance in Latin America has led to divided opinions on its effects. MFIs are moving into the consumer, mortgage and low-end commercial loan segments. NGOs are starting to look more like commercial institutions. Supporters of the social mission of microfinance view commercialization as a possible drift from the inherent purpose of microfinance. The paper presents case studies and empirical research on whether commercialization impairs depth of outreach. It uses data from 190 Latin American institutions.

Transformed MFIs can reach new heights of financial and social success, measured in increase of outreach, profitability and establishment of a viable institution that could serve the poor long-term by keeping to their mission, providing social and financial intermediation. Study findings include:

Success of microfinance in Latin America can be directly attributed to commercialization;
Transformation by upgrading teaches valuable lessons to other MFIs striving to achieve financial sustainability and profitability;
Commercialization factors and loans sizes are not associated;
Women borrowers and average loan sizes are negatively correlated.

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05 Jan 2012


Very insightful paper, and thorough explanation of different microfinance trends.

Elizabeth Gray United Kingdom

07 Jul 2011



tahra ali Sudan

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Publisher(s):
Sweet Briar College