Role Reversal- Are Public Development Institutions Crowding Out Private Investment? (2007)
The rapid growth of foreign private lending to microfinance institutions (MFIs) in the last several years has led to a surprising reversal of roles between government-owned development agencies and private lenders. Development institutions (International Financial Institutions -“IFIs”) are concentrating their loans in the strongest MFIs, leaving private lenders to look for opportunities among smaller, riskier borrowers. Development institutions are “crowding” private lenders out of the best MFIs.