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Microfinance in Action: The Philippine Experience
Policy Comment No. 1
Stephen Daley, Frederic Sautet
February 3, 2005
For the past 20 years, the Philippines has served as a natural experiment for microfinance. As one of the oldest and most active microfinance environments in the world, the Philippines has much to teach about the potential for microfinance to alleviate poverty, and to serve as a stepping stone to prosperity. However, one must not lose sight of the fact that microfinance has become a viable option only because the institutional environment in many developing countries is unworkable. Microfinance is a band aid, a necessary band aid at times, but a band aid nevertheless. While microfinance has proven its ability to combat poverty in the short-term, deeper institutional reforms are required if development efforts are going to put the poorest of the poor on the path to prosperity.
