Alternative Approach for Evaluating the Performance of Microfinance

Abstract

The commercial approach of microfinance has been hailed by global microfinance institutions whereas it has been criticized by development studies groups. The relatively high returns of microfinance institutions may meet the necessary condition for their financial sustainability, but they may fail to cater for the sufficient condition for alleviating mass poverty. This article argues that it may be required to reflect different economic and social context for evaluating the performance of microfinance among the outreach for the poor, financial sustainability, and the welfare impact. It recommends that cooperative microfinance may be more effective for alleviating mass poverty than commercial one.