Wholesale funding to microfinance and social development goals in Peru, Tamil Nadu, and Tanzania

The paper studies the 'wholesale' market through which microfinance institutions (MFIs) operating in Peru, Tanzania, and the state of Tamil Nadu in India obtain credit. The focus is on the network of relationships between MFIs and their lenders in each setting in order to explore the extent to which they mirror country-specific regulatory, economic, and social factors; to identify the regulatory frameworks that are most conducive to channelling sufficient funding to microfinance; and elucidate the conditions under which MFIs' ties with wholesale lenders enhance their ability to achieve their dual goals of poverty reduction and financial sustainability. The study brings to light considerable cross-country variation in the structure and features of wholesale lending relationships, and relates it primarily to differences in regulation. On this basis, this paper makes the case that building a more enabling regulatory environment for lending partnerships may improve the capacity of microfinance to pursue its mission.