Take-up: Why Microfinance Take-up Rates Are Low & Why It Matters

June 2010
By Dean Karlan, Jonathan Morduch, and Sendhil Mullainathan 

Take-up: Why Microfinance Take-up Rates Are Low & Why It Matters
If you listen to the strongest pitches for microfinance, you would imagine that everyone offered microfinance would leap at the chance to be a customer. Yet this is not so. Evidence shows that it’s usual that under half of eligible households participate in microfinance. Moneylenders are still in business, and many individuals in develop- ing countries still rely primarily on family and friends to meet their needs for money. This is not necessarily a bad thing: informal sources of credit provide a useful way to finance profitable investments or respond to life events. But it shows that the demand for existing microfinance institutions and products can’t be taken for granted.