Microfinance: A Comprehensive Review of the Existing Literature

This article introduces the concept of microfinance and MFIs to the academic finance community through a review of over 350 articles.

Microfinance has existed since the rise of formal financial systems. The article states that though the core elements of microfinance are based on the finance discipline, microfinance has not yet broken into mainstream or entrepreneurial finance literature. It addresses six key areas of microfinance, namely:

• Self-sufficiency and sustainability of MFIs;
• MFI products and services;
• Best practices in MFI management;
• Client targeting, specifically, gender targeting and poverty targeting;
• Microfinance as a poverty alleviation strategy, and regulatory environment;
• Assessing social impact of microfinance.

The article identifies key topics within each area and discusses relevant peer-reviewed articles, focusing on issues important to the academic finance community. It concludes by stating that microfinance offers the finance discipline a possible avenue to make a difference in the lives of the poor.