Developmental Impact and Coexistence of Sustainable and Charitable Microfinance Institutions: Analysing BancoSol and Grameen Bank

Abstract

Based on the current discussion of the development of a commercial market segment of Microfinance Institutions (MFIs), this paper evaluates the developmental impact of charitable MFIs that rely on subsidies in comparison with sustainable MFIs that operate independently from grant funding. BancoSol from Bolivia serves as a case study of a sustainable MFI. Grameen Bank from Bangladesh represents a charitable MFI. The case studies confirm both the theoretical arguments for sustainable MFIs promoted by the institutionist approach to microfinance and the arguments for charitable MFIs advocated by the welfarist approach. The paper argues that both kinds of MFIs are justified and should continue to coexist. The second part of the paper suggests institutional solutions to facilitate the coexistence of both types of MFIs. Cet article repose sur le debat actuel portant sur le developpement d'un segment de marche commercial des institutions de microfinances (IMF). Il evalue les impacts respectifs sur le developpemen...