Microfinancing: challenges and prospects. Appropriate conditions for changes from informal to formal microfinancing institutions

Abstract

"The International Year of Microcredit 2005 underscores the importance of microfinance as an integral part of our collective effort to meet the Millennium Development Goals. Sustainable access to microfinance helps to alleviate poverty by generating income…" (Kofi Anan). One of the important factors which influence disbursement of public debts in the LDCs are Microfinancing institutions. The article characterizes the progress of discharge of bankrupt from the macroeconomic point of view, and in the situation for microfinancing industry. One of the main question is when and under what conditions it is the suitable to accelerate the transformation of informal MFIs to formal institutions. In the conclusion, the basic conditions and hypothesis, which are necessary for functioning of formal MFIs, are mentioned.

Keywords

• microfinance
• microfinance industry
• risk mitigation
• formal and informal mfis
• sustainability