By Julie Abrams and Damian von Stauffenberg, sponsored by Calmeadow, 24 pages. This paper discusses the relationship between government-owned development institutions (called International Financial Institutions or IFIs in the paper), who concentrate their lending on the strongest microfinance institutions (MFIs), and the private lenders, who are left only smaller, riskier MFIs. The authors contend that the IFIs are crowding out the small private institutions from lending to the “best MFIs,” in contrast to their public claim of taking the risks the private sector is unwilling to take.

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