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Abstract
The dissolution of the Soviet Union and the collapse of state-ownership launched a new era of self-employment and small businesses throughout the region. Microfinance has become a mechanism of financing small entrepreneurs that mainstream banks considered non-bankable. This research addresses the important question of the universality of the microfinance lending model by analyzing the operating environments and operating strategies of microfinance institutions (MFIs) in several regions of Eastern Europe, Central Asia, and India. The analysis focuses on three essential components of MFIs performance: loan portfolio quality (delinquency), profitability, and outreach. The empirical results suggest that no universal model is applicable for MFIs in different regions and countries. Indian MFIs are more outreach oriented, whereas Eastern European and Central Asian (ECA) MFIs are more conservative and primarily driven by the financial bottom-line. However, the ECA MFIs are expected to achieve greater poverty outreach upon maturation.