Chapter 14: Microfinance During the Global Financial Crisis (2007–2009): Are There Lessons from COVID-19?

Although many economic, social, and environmental crises have occurred in the past, the recent novel coronavirus (COVID-19) disease is believed to have generated the most severe impact worldwide. Motivated by the lack of data from the global microfinance sector with respect to COVID-19, we have attempted to understand the effect of the pandemic on the microfinance industries through the lens of the 2007–2009 Global Financial Crisis (GFC). In so doing, global data of 2,995 microfinance institutions (MFIs) from 2000 to 2018 were analyzed, highlighting the effect of the GFC on the outreach and financial objectives of MFIs. Our assessment revealed that the GFC mostly had a negative impact on the dual goals of MFIs. Most importantly, the GFC triggered the transformation of the legal status of MFIs from Non-Governmental Organizations (NGOs) to other types (e.g., non-bank financial institutions). Similar outcomes are expected in the aftermath of the COVID-19 in the microfinance industries.