Publication: Are We Overestimating Demand for Microloans?
Date
2008-04
ISSN
Published
2008-04
Author(s)
Anand, Malika
Rosenberg, Richard
Abstract
This brief addresses demand for micro
credit only, not demand for microfinance or other
microfinance services, such as savings or funds transfers,
which may be greater than the demand for micro credit. For
instance, the ratio of savers to borrowers is about 10-to-1
for Bank Rakyat Indonesia, 9-to-1 for Centenary Bank in
Uganda, and 4-to-1 for PRODEM in Bolivia (MIX Market). Micro
credit demand estimates address the amount of funding
required: the expected number of active borrowers is
multiplied by an assumed average outstanding loan amount.
Reasonable estimates of average loan size can be derived
from international databases maintained by the mix market
and micro credit summit. But estimating numbers of expected
borrowers can be a minefield. This brief discusses the kinds
of reductions that should be factored into a demand estimate
and looks at some all too-sketchy empirical evidence about
the size of those reductions. Most-but not all-of this
evidence raises a concern that demand may often be
overestimated by a considerable margin.
Citation
“Anand, Malika; Rosenberg, Richard. 2008. Are We Overestimating Demand for Microloans?. CGAP Brief. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/3fdbb1d8-41fb-523d-84c4-e6135284cf5e License: CC BY 3.0 IGO.”