Microfinance in the Caribbean: How to Go Further

Sep 2005
This paper discusses microfinance institutions (MFIs) in the Caribbean. It argues that the reason they have lagged is fundamentally explained by factors internal to the MFIs, rather than external to them. The paper introduces four Caribbean MFIs, two with track records of low loan delinquency rates and two with track records of high loan delinquency rates, and analyzes their lending methodology. The paper concludes that Caribbean MFIs can become profitable, successful financial institutions by making changes to their internal policies and procedures. This is a very empowering conclusion, for it says that Caribbean MFIs need not wait for someone else to remedy external difficulties. They can be successful by changing their own practices. The second half of the paper goes on to analyze the kinds of changes that are needed for Caribbean MFIs to become successful.