Financing the middle market in high-risk and changing regulatory environments

Abstract

Microfinance has proven an effective way to reach the poor, but financial services for the slightly larger ‘small firms’ are still largely lacking, even though it is this sector that has greater prospects for driving economic growth and providing employment. CHF International has begun to focus its efforts on this middle market sector, by founding non-bank financial institutions that lend to small businesses. This article describes two such companies, Express Finance in Romania and IMMDF in Iraq. The challenge in one case is to provide flexible banking services to small firms struggling with the challenges of transition to EU regulations, and in the other case with a dangerously insecure and volatile environment. In both cases flexible products and well-trained staff were important to provide business services to complement financial services.