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The demand for flexible microfinance products: lessons from Bangladesh
Topic : Digital Finance
Using evidence from microfinance institutions in Bangladesh, this paper suggests that many of the poor refuse to use MFI products, while among those who do, dropouts, overlapping and delinquency appear to be rising. Informal sources of finance continue to be as important for poor households as they always have. This evidence suggests that MFI products are not as flexible as poor people would wish.
Having looked at how MFIs respond to client demands and preferences, the author concludes that there is a need for most MFIs to base their development more strongly on market research and pilot testing, which characterised the pioneering work of the Grameen Bank in its early days. MFIs will have to recognise and manage the trade-off between product flexibility and client satisfaction on the one hand and costs and risk for the MFIs on the other.
- Resource type Case Study
- Author Meyer, R.L.
- OrganisationOhio State University, Rural Finance Program
- Year of Publication2001
- RegionGlobal
- LanguageEnglish
- Keywords Delinquency, Informal Finance, Client Needs, Market Research, Costing