The Microfinance Industry in the Philippines: Striving for Financial Inclusion in the Midst of Growth

Abstract

Several factors have contributed to the growth of the microfinance industry in the Philippines – the adoption of a sound business model – patterned after Grameen Bank – that caters to a large untapped market, assistance from government and/or donor agencies, a supportive policy and regulatory environment, and innovations based on Internet and mobile technology. However, microfinance institutions (MFIs) continue to face challenges that could affect their ability to reach more poor people even as they strive to achieve financial sustainability. To better understand the challenges faced by MFIs in meeting both their social and economic goals, we propose a research program that addresses the gaps in measuring the ‘quality’ and ‘welfare’ dimensions of financial inclusion, and that complements the development-economics literature by examining MFIs from a business-strategy perspective.