Should Banks in Palestine Invest in Microfinance Market?

Abstract

In this paper we will just have an overview about the Palestinian MFI’s performance, microfinance market size, advantages, obstacles and opportunities available for commercial banks in this market. By using some researches & references (referred in Page No 12) we will mention to some methods that helping the banks in entering the microfinance market and analyze the applicability of these methods for the banks in Palestine market. Summary: The microfinance market is huge and potential market with limited penetration of MFI’s working in Palestine. The current poor performance of MFIs in Palestine does not reflect the potential that a profitable market does in fact exist. All the methods mentioned above could be applied in different ways with different levels of success but the trick is in which method and how to enter this market effectively. Banks should determine what targets and goals to establish, select the right clusters and sectors, create a retail strategy and choose the optimal method to enter this market in effective ways. The micro businesses need for more than loans, and the needs for comprehensive multi-financial services makes the banks are more compatible place for them. In the same time, the banks have opportunity to serve these needs in profitable way.