Role Reversal Revisited
By Damian Von Stauffenberg and Daniel Rozas - Published: 2011
This paper examines the idea that Development Finance Institutions (DFIs) are crowding-out private investments in microfinance. The premise is that DFIs should invest where private sources of funding don’t yet go because the risk is too high and the process too time-consuming; they should pave the way for private resources rather than competing with them. “Role Reversal Revisited” is a follow-up to “Role Reversal” (MicroRate, 2007), which uncovered a pronounced tendency for DFIs to lend to the most creditworthy MFIs, forcing private microfinance investment vehicles (MIVs) to invest in smaller and riskier institutions.
