Despite growth in the global economy over the last few decades, a large percentage of the population remains poor, particularly in the developing world. Microfinance -- providing affordable financial services to the poor -- is a powerful tool for reducing poverty. Asia is home to the lion's share of the world's poor, calling for a significant increase in financial inclusion in the region. At the same time, it is imperative to make microfinance systems in the region more sustainable so they can meet people's financial needs immediately and in the long run. The successful development of microfinance in Asia would benefit the region by alleviating poverty and promoting economic prosperity.
This paper surveys the landscape of microfinance in Asia, analyzes the challenges that Asia's microfinance is facing, and discusses strategies to build a sustainable microfinance system. It is our hope that this study can provide useful information and insights to policymakers, microfinance providers and other stakeholders so they can make better decisions that will inform the development of microfinance throughout the world.
The structure of the paper is as follows: Section 1 introduces the concept of microfinance and its historical development. Section 2 provides an overview of microfinance in Asia in a global context and the development of microfinance in several representative Asian countries. Section 3 discusses the challenges of and strategies for building a sustainable microfinance system in the region. Section 4 offers conclusions.