Profits and Poverty: The Impact of Profit Status on the Microfinance Industry

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2013-04-15

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Abstract

Microfinance is the practice of providing small, collateral free loans to the poor. While the microfinance industry was initially comprised of predominantly non-profit institutions, a shift towards for-profits has emerged. This paper examines the effects of changes in for-profit concentration on the microfinance industry. First, an economic model for the activity of non-profit firms is established. Empirical data from microfinance institutions (MFIs) is then analyzed in the context of this model. Findings indicate that for-profit MFIs serve more borrowers, serve wealthier borrowers, and do not provide lower quality loans than non-profit MFIs. There is also evidence that economic models developed to understand non-profit decision-making might not apply to the microfinance industry.

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Hogan, Kevin (2013). Profits and Poverty: The Impact of Profit Status on the Microfinance Industry. Honors thesis, Duke University. Retrieved from https://hdl.handle.net/10161/6520.


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