“Diminishing returns: Microfinance in the era of the pandemic”

Abstract

Microfinance has been termed as the pioneer of Gender Equality and women empowerment by providing financial services and enabling entrepreneurial mindset in women. One of the key differences between the developing and the developed world has been the participation of females in the workforce as well as the household decision-making process. To achieve these twin objectives, the services of Microfinance have emerged as a significant tool. After its origin in comparatively poor countries such as Bolivia and Bangladesh, microfinance services have been used around the world; especially in the south Asian and Latin American regions. The evolution of these services has also been witnessing the economic development of the regions of its operation. The high repayment rate has resulted in the emergence of this sector as a lucrative business model. The recent pandemic, however, has jolted this sector by increasing overdue and portfolio at risk.

 This paper, taking into consideration the existing literature in the field of microfinance and empirical pieces of evidence obtained primarily through publically available data, field accounts and investigative reports have attempt to analyze the impact of covid-19 on repayment of microfinance service providers and also suggest methods to overcome these bottlenecks. This paper will be useful for those scholars/academicians/practitioners who want to conduct further research in the field of sustainable financial inclusion models, with a special focus on microfinance.