Dimensions and Dynamics of MFI Competition in Bangladesh

The paper presents some observations from a research that studies the emerging phenomenon of MFI competition in the mature microfinance market of Bangladesh. This informal note shares a few thoughts that emerged from a recent CGAP research initiative on this matter. The research comprises two parts:

• Maps microfinance client concentration at the thana level (the administrative unit below the district level). This involved collecting branch-specific information on location, name of the thana(s) of operation and client outreach information of the top 20 MFIs in Bangladesh;
• Explores the various dimensions and dynamics of MFI competition emerging in Bangladesh. A combination of quantitative questionnaire surveys, focusing on the microfinance participation history of households and qualitative case studies, focus group discussions and intensive interviews that build on the quantitative survey, were used.

The overall research is expected to provide useful information for any type of intra-industry instrument that the microfinance industry in Bangladesh might want to pursue to manage possible systemic risk arising from uncoordinated competition.