Financial Sector Policy and the Poor

With the huge global enthusiasm for microfinance, many policymakers and NGOs are unaware that mainstream financial sector development is just as important for poverty reduction. It is often thought that promoting specialized microfinance institutions is the best or only way forward, but a strong mainstream financial system is also pro-poor; perhaps even more so. The author of Financial Sector Policy and the Poor finds that the scale of microfinance remains very small, the contrasts in style between micro and mainstream finance have been exaggerated, and evidence for the pro-poor effectiveness of microfinance is much weaker than is often supposed. He argues that the roles played by microfinance and mainstream finance in tackling poverty should be regarded as complementary and overlapping rather than as competing alternatives. This title presents new cross-country empirical evidence as on how financial sector policy can help the poor. In addition, this title reviews the scale, style, and effectiveness of the microfinance sector in comparison with mainstream finance.