Selected microfinance crises: past, present, and future

Abstract

Abstract The Covid-19 pandemic is the most recent—and most severe—crisis to face the microfinance/financial inclusion sector, but it was far from the first. From its earliest years, crises have appeared throughout the modern history of microfinance, and the responses they engendered have included some of the most significant reforms and innovations in the sector. In this paper, we describe selected historical crises—Peru in the 1980s, Grameen in the 1990s, and Andhra Pradesh and others in the 2007–2010 period—through their legacy and impact on the sector’s activities and priorities. We then examine some of the pressures on institutions during the pandemic, through interview data with MFI leaders from the Sentinel Project conducted during 2021–22. We argue that the resilience of the sector to the unprecedented pressures of the pandemic can be traced to many of these historical post-crisis reforms—and consider what this means for future crisis responses.