Addressing Constraints in the Provision of Financial Services to MicSMEs and Poor Households

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In order to promote microfinance or the provision of a broad range of financial services to poor and low-income households for their microenterprises and small business endeavors, several financial sector reforms were initiated by the government beginning in the 1990s. Notwithstanding the considerably improved policy environment for microfinance to flourish, however, banks still face a number of constraints in expanding their financial services to the above target beneficiaries. What are these constraints? This Policy Notes outlines some of them and recommends measures to address them.