Assessing Microfinance: Striking the Balance Between Social Utility and Financial Performance

Abstract

Microfinance was designed as a development tool, but remains firmly anchored in the market economy, creating an ambivalence that blurs the traditional distinction between the political and economic, the public and private, the commercial and social. Its hybrid nature makes it unique among development tools: microfinance benefits from financial, fiscal and regulatory support, while maintaining relative independence from governments and donors and their fluctuating agendas. The result is a heterogeneous and complex sector that articulates different scales: the local, given it is microfinance, and the national, as states closely supervise retail-banking activities. But it is also a global field, involving various transnational actors: NGOs, cooperation agencies, investors, private entrepreneurs, multilateral agencies, and so on.