Microfinance: Worth the Hype? A Case Study of Bosnia and Herzegovina and Opportunities with the European Bank for Reconstruction and Development

This paper describes European Bank for Reconstruction and Development's (EBRD) support to microfinance, with specific focus on its work in Bosnia and Herzegovina (BiH). Previous approaches to aid have not been successful in alleviating poverty. Microfinance has begun to fill the gap, and international institutions, such as the EBRD, believe in its prospects. The paper states that:

• Microfinance has become popular because it targets the impoverished and marginalized;
• Providing marginalized clients with small amounts of start-up money gives them the opportunity that conventional banking does not;
• Microfinance helps countries to transition to a market economy as is evident in the case of BiH;
• EBRD has supported BiH's efforts to develop into a market economy.

Increased cooperation between governments, international institutions, NGOs, and MFIs will increase the cohesiveness of global aid policies for the poor. Microfinance products and services should be adapted to country needs. The paper states that microfinance is a valuable resource that helps to pull the extremely poor out of poverty and empower them, and the international community should continue to support such MFIs and the use of microfinance.