In the past few years, powerful changes have been taking place in microfinance, setting the stage for a fundamental transformation of the field. These changes are opening the sheltered domain of microfinance, once the preserve of donors and development organizations, to the broader financial marketplace. In a handful of countries, a competitive market is emerging in the provision of financial services to the poor. Low-income clients in Bolivia, Chile, Paraguay, Bangladesh, parts of Uganda, and several other countries can now choose between a number of high quality microcredit options and soon may be able to open passbook savings in a variety of microfinance institutions. Although many or most of the institutions providing these services were created by organizations focused on development, some recent entrants have primarily commercial motivations in reaching low-income clients. These new entrants are bringing with them new skills, technologies, and comparative advantages. The competition between microfinance service providers is sparking innovation at a fast pace.
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