Global financial partnerships in microfinance: India, Peru and Tanzania

The paper studies the 'wholesale' market through which microfinance institutions operating in three contexts (Peru, Tanzania and the state of Tamil Nadu in India) obtain loans from a variety of domestic and international funding bodies. The nature and characteristics of the relationships between them are captured through network analysis and visualization tools, with a dataset comprising inter-organisational lending relationships and organisations' attributes over the years 2006-8. Focus is on the extent to which patterns in wholesale lending relationships relate to the legal status and characteristics of microfinance institutions; to the regulatory, business and social environment in which they operate; and to shifts in the balance between social and commercial interests of diverse types of lenders. The analysis brings to light considerable cross-country variation in the structure and features of wholesale lending relationships, and relates it primarily to differences in governance and regulation. On this basis, it makes the case that building a more enabling regulatory environment for funding partnerships may improve the capacity of microfinance to achieve its dual goals of poverty alleviation and financial sustainability.