Contents
List of Tables x
List of Figures xi
List of Boxes xii
Preface and Acknowledgements xiii
Notes on the Contributors xiv
Introduction xvi
Mario La Torre
1 A New Conception of Microfinance  1
Mario La Torre
1.1 Introduction 1
1.2 The nature of microfinance: microfinance vs microcredit 2
1.3 The demand for microfinance  3
1.4 The supply of microfinance  5
1.5 Products and services in microfinance  8
1.6 A new taxonomy for microfinance  9
1.7 Microfinance and ethical finance  11
1.8 Conclusion 18
2 Products and Services in Modern Microfinance 20
Silvia Trezza
2.1 Introduction 20
2.2 Financial services  21
2.3 Product development process  31
2.4 Non financial services: minimalist vs
integrated approach  34
2.5 New frontiers in microfinance services  35
2.6 Conclusion 36

3 The Main Features of Microcredit  38
Gianfranco Vento
3.1 Introduction 38
3.2 The screening of beneficiaries  39
3.3 The nature of financed assets  41
3.4 Distinguishing features of microcredits  42
3.5 Collateral policies  44
3.6 Interest rates in microcredit  50
3.7 Conclusion 53
4 Sustainability and Outreach:
the Goals of Microfinance  54
Gianfranco Vento
4.1 Introduction 54
4.2 Sustainability and outreach  55
4.3 Sustainability: how to reach it  59
4.4 Outreach: how to select the beneficiaries  62
4.5 The microfinance dilemma: sustainability vs outreach 64
4.6 The policies for improving sustainability  66
4.7 Conclusion 69
5 Risk Management in Microfinance  71
Mario La Torre
5.1 Introduction 71
5.2 A taxonomy of risks for microfinance  72
5.3 The business risk  73
5.4 Financial risks  75
5.5 Process risks  89
5.6 Conclusion 91
6 Monitoring the Microfinance Processes  93
Monica M. Ortolani
6.1 Introduction 93
6.2 Reasons for a process approach  94
6.3 Microfinance processes  95
6.4 The process of microcredit  98
6.5 Process-related risks  102
6.6 Control typologies  105

6.7 The incentive system  108
6.8 Conclusion 110
7 Microfinance Performance  112
Marco Tutino
7.1 Introduction 112
7.2 Performance analysis  113
7.3 Performance evaluation model for microfinance project 116
7.4 Performance evaluation models for MFIs  120
7.5 Conclusion 130
8 The Role of Regulation  132
Gianfranco Vento
8.1 Introduction 132
8.2 Regulation, supervision and microfinance  133
8.3 Determinants for regulating microfinance  134
8.4 Key variables for microfinance regulation  138
8.5 Which instruments to adopt  144
8.6 Conclusion 149
9 The Road Ahead:A Platform for Microfinance 151
Mario La Torre
9.1 Introduction 151
9.2 The features of modern microfinance  151
9.3 The microfinance platform: actors and functions 153
9.4 Conclusion 157
Notes 158
Bibliography 160
Index 171