Self-Help Groups as Financial Institutions: Policy Implications Using a Financial Model
by R. Srinivasan

This paper uses a spreadsheet financial model to identify key financial policy parameters that influence the performance of self-help groups (SHGs)whose primary activity is microfinance.The focus is on long-run (ten-year)performance.There is bad news for those policy makers and practitioners who focus unduly on growth as measured by loan activity.A conservative financial policy that does not inject external funds into the SHG in the initial years and,when it does, does so with moderation,seems appropriate in the long run.Additionally, a high loan interest rate policy produces SHGs that are strong financial institutions.

SHG-Bank Linkage Program in India: An Overview
by Hema Bansal

The formal financial institutions in India have ventured into microfinance in a massive way by adopting the SHG-Bank Linkage Program model.The present paper makes an attempt to review the performance of the program in different states of India and across three major institutions—commercial banks,cooperatives,and the regional rural banks.The study also presents vital information about the leading NGOs with major credit linkages in Indian states.

Microfinance for Housing: The Mexican Case
by Michael Goldberg and Marialisa Motta

Can Microfinance Institutions (MFIs)help address the needs of mil- lions of low-income families in Mexico for housing improvement loans?The paper assesses whether MFIs are suited to providing housing improvement credits and evaluates whether diversified housing portfolios can improve per- formance and mitigate risks for these institutions.After showing that the microfinance industry is at a nascent stage in Mexico,and that the current sup- ply of housing microfinance credits is a tiny fraction of the estimated demand for these loans,the paper provides suggestions for government and donors to serve as short-term catalysts for the expansion of MFIs in the housing field. Recommendations include support for market studies to assess the character- istics of demand and to develop attractive housing microfinance products,pro- viding incentives to help MFIs develop new or scale up existing housing portfolios,offering innovative sources of funds for housing microfinance,and encouraging franchising and joint ventures between various institutions involved in this field.

Designing Microfinance from an Exit-Strategy Perspective
by Larry Hendricks

In bilateral microfinance projects,exit strategies or "hand over" phases generally have not proven very successful.Institutions,groups,or processes designed with the sole purpose of implementing microfinance projects,to the exclusion of promoting postproject sustainability,tend to develop vulnerabili- ties that lead to their programs ’ failure..To counter this problem,China ’s Chongqing Comprehensive Poverty Alleviation Project (CCPAP)takes a differ- ent tack,designing an exit-strategy approach into its microfinance program from the outset.While still in the design phase,this approach has raised several criti- cal issues that must be resolved,and these comprise the main focus of this paper.

The Impact of Large Capital Infusion to Community Development Credit Unions
by Jared Raynor

Through a process of peer comparison and analysis of historical financial trends,the impact of outside capital on the development and growth of community development credit unions is examined and small case studies of superior performers are presented.The data set includes twenty credit unions that have received CDFI core awards in the 1996 to 1999 period.The findings indicate that awardees have a higher growth rate than their peer groups in all areas of traditional indicators,including asset growth,member growth,share and deposit growth,loan growth,non- member deposit growth,and overall capitalization.It is further indicated that while the award money itself has an impact on growth,it is not the pri- mary cause of the higher growth rates over the peer group.Rather,the award allows the organizations to expand by helping provide a stable capitalization ratio,financing new projects that increase growth,and giving the credit unions a positive reputation with investors other than the CDFI Fund.

Problems? What Problems? We Have None at All: Qualitative Data Collection for Impact Assessment
by Katie Wright

Increasing interest in impact assessment of microfinance and other development interventions highlights the need to understand links between activities and outcomes in order that programs and services can be improved.This paper draws out the complexities of using prompting and open-ended questions in semistructured interviews and also considers entry points for field research.This is done with reference to a study of the impact of microfinance on women in poor areas of Cajamarca,Peru. Drawing on findings from over eighteen months of fieldwork,it examines the trials and pitfalls in question design and suggests guidelines for better practice.

Book Review
New Directions in Poverty Finance. By Craig Churchill, Madeline Hirschland,and Judith Painter
by Stuart Rutherford