Paper
Microfinance in Sri Lanka: A Household Level Analysis of Outreach and Impact on Poverty
Examines the outreach of microfinance and the impact on poverty and welfare of households
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56 pages
This study makes the following statements:
- Microfinance services in Sri Lanka have a wide geographical outreach;
- The outreach of private operators including non-government organization (NGOs) and commercial banks in rural areas is limited;
- Although microfinance institutions (MFIs) have reached the poor and the poorest groups, a significant proportion of their clientele is from the non-poor groups.
- Microfinance has helped:
- The middle quintiles to increase their income and assets;
- The very poor increase consumption expenditure;
- Poor to inculcate savings habits;
- Smoothen consumption;
- Women to improve their social status and economic conditions.
- The informal financial market is pervasive across districts and among different income groups.
The study concludes that to create sustainable micro-enterprises in Sri Lanka, there is a need for:
- MFIs to facilitate or get directly involved in providing credit-plus services to their clients;
- Development of rural infrastructure facilities that would encourage the private and NGO sectors to get involved in microfinance provision;
- Recognition of the heterogeneity of microfinance clients and their needs in designing more effective microfinance instruments.
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