Microfinance for poverty alleviation: Do transnational initiatives overlook fundamental questions of competition and intermediation?

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Why is it important?

This UNCTAD article is about the United Nations' Sustainable Development Goal #1: Poverty Alleviation. The objective of microfinance initiatives is to foster micro-entrepreneurs but an unintended consequence can be informal intermediation. That is, some entrepreneurial borrowers become informal intermediaries between microfinance initiatives and poorer micro-entrepreneurs. Those who more easily qualify for microfinance split loans into smaller credit to poorer borrowers. Informal intermediation ranges from casual intermediaries at the good or benign end of the spectrum to 'loan sharks' at the professional and sometimes criminal end of the spectrum.