Sustainable Microfinance - Balanced Scorecard's added value for ...

show that if, (1) the amount that a successful borrower owes for his defaulting partner
is optimally determined, and (2) the penalty is allowed to vary across group
members, then even in the absence of any social sanctions or cross-reporting, (1)
expected borrower welfare is strictly higher with group lending when both group
lending and individual lending are feasible and (2) group lending is feasible for a
greater range of opportunity cost of capital. These results are robust to collusion
between borrowers.”
Fifth, knowing that there are sustainable microfinance examples in CEE and
developing countries, it is important to know the difference between those regions
and Western Europe. According to Molenaar (2009), the key characteristics of
microfinance in Western Europe compared to the other regions are; individual loans
rather than group-based lending, higher average loan size (around !11.000), tailored
business and financial support, general for a longer period, higher average interest
rate and in addition to interest, most MFIs in the EU area charge loan application
fees, loan processing and interest penalties on top of the interest as a means of
covering operational costs. This is most common where MFIs strive for their own self-
sustainability. Granger and Lämmerman (2009) argue that comparing microfinance
development conditions is impossible, because wealth in the countries is different, as
is the concept of involvement of public money in microfinance. Even the concept of
the aims and the concept of entrepreneurship as a model for microfinance are
different.
Finally, within Western Europe, some important players like, Adie in France (based
on the Grameen Bank model), are making a short-term objective out of becoming
sustainable (Genet, 2009). Adie for example has established six pilot branches called
Adigo branches. A person who would like to take out a loan has to gather three other
persons who each have an individual business project and need a loan. Each person
in the group obtains a loan and needs to show solidarity for the loan repayment of
each other member of the group (Granger and Lämmerman, 2009).
3. Aims and objectives
The aim of the Thesis Project is to find out how the Dutch microfinance model (used
to stimulate entrepreneurship) can be made sustainable. This will be done, by
analyzing successful (foreign) examples.
Elmar Hoogendoorn 91
Sustainable Microfinance