This reluctance on the part of mainstream lenders creates an opportunity for microfinance but also underlines the paramount importance of credit risk management in an industry that, in Western Europe at least, continues to be driven by socially motivated investors and entities supporting microfinance as part of their social responsibility initiatives. This realisation has a significant impact on the pricing of financing instruments to such types of entities and has arguably served to undermine the development of viable microfinance models in terms of self-sustainability. Self- sustainability of microfinance models is critical for the industry to ensure long term availability of microfinance.
