2005 Eastern Europe and Central Asia Microfinance Analysis and Benchmarking Report - Russian

The Eastern Europe and Central Asia 2005 report emphasizes the region’s leading role in the integration of microfinance services with the formal financial sector. It also confirms that the microfinance sector in Eastern Europe and Central Asia (ECA) remains limited in scale.

ECA microfinance institutions (MFIs) serve, on average, the smallest number of borrowers of any region, making loans nearly twice as large as any other region, with limited savings mobilization. Banks dominate the region, attracting the majority of commercial investment and reaching almost half of the borrowers. Bank margins have been squeezed through decreasing yields, and throughout the region, returns drop as loan balances increase.

At the same time, there is increasing sustainability and growth among non-bank programs in the Caucasus and Central Asia reaching underserved rural and low-income populations, although the provision of microcredit to these clients often comes at a higher price. A combination of low rates, high expenses and increased delinquency has limited the sustainability of non-bank microfinance within much of Eastern Europe. The clear exception has been the highly concentrated market in Bosnia and Herzegovina, where a number of non-bank institutions have been able to operate efficiently and profitably, while still maintaining deep outreach.