socio - economic welfare? to answer this question, we have to go beyond personal experience and also look at the data and results of the available scientific studies. however, there has been surprisingly little scientific work on the effectiveness of microfinance programs. according to some experts this may be explained by the fact that many donors who finance microfinance institutions are focussed on reaching as many poor people as possible. evaluating programmes is often seen as a waste of time and money – and let me say that from a practical point of view such a perception is understandable. but, from a broader policy point of view, it is important to know which concepts work best and which concepts are less effective. careful experimentation with sound control groups may provide such insights. another explanation for the limited degree of scientific evaluation is lack of data. often there are simply not enough data available to study the effectiveness of microfinance. moreover, the available data may be of limited use because, for example, accounting definitions differ between institutions in the microfinance industry. i therefore welcome recent initiatives, for example by the world bank, to improve the quality of reliable data to increase our current knowledge. with these shortcomings in mind, the available studies provide a rather positive picture of microfinance and confirm my personal observations. it turns out that microcredit helps people to increase their income through entrepreneurial activities. the effects are often larger for women than for men and seem to diminish if the size of the loan increases. this latter result suggests that the smallest loans can actually make the biggest difference! and that women remain an important target group. the market for microcredit and initiatives in the netherlands the prospect for the microcredit industry in general is strong. the market is growing rapidly and supply can hardly keep up with demand. it is estimated that only 4 percent of global demand for microfinance services is being met. note that the potential global microfinance market is worth roughly $ 300 billion, although estimates vary widely. also, with the growing development of the microfinance sector, sources of funding for mfis have diversified. official donors are no longer the primary source, as tens of microfinance funds and more and more private sector investors are also offering capital to mfis and are rapidly commercialising microfinance. these investors are typically private - sector funding arms of donors and socially motivated, privately - managed investment funds financed by public and private capital. although both types of investors generally take

nout wellink : microfinance – small loans, big differences speech by dr nout wellink, president of the netherlands bank and chairman of the basel committee on banking supervision, at the roosevelt academy, middelburg, 1 june 2007. * * * today is special. you represent the very first graduation year of the roosevelt academy, and undoubtedly there awaits a bright future for you all wherein chances of success will abound. clearly your accomplishment also signals the big achievement by the academy and its faculty members. today, i wish to talk to you about another success story, namely that of microcredit. the un designated 2005 the international year of microcredit. the aim was “ building inclusive financial sectors and strengthening the powerful, but often untapped, entrepreneurial spirit existing in communities around the world. ” the year of microcredit has proved highly successful. it has raised awareness around the globe about the importance of microfinance in fighting poverty and empowering the poor by enhancing higher incomes and more jobs. in other words, microfinance can promote economic and social inclusion. permit me to address the issue of microfinance in greater depth. “ microfinance ” generally stands for financial services for the poor. microfinance is important because well over three billion people do not have access to basic financial services such as credit, savings accounts and insurance. microfinance can offer such basic financial services, which is of prime importance to these people. these financial services are provided by so - called " microfinance institutions " ( mfis ) or " microlenders ", which are simply generic terms for the estimated 10, 000 diverse entities such as commercial banks, ngos, credit unions, finance companies etc. while from now on i will have microcredit in mind when referring to microfinance in general, please keep in mind that microfinance services are much broader and also include insurance, deposit taking and sometimes even pensions. however, the most important element of microfinance today is still micro credit. let me therefore begin by explaining what microcredit is, how it works and whether it helps poor people to improve their living standards. thereafter i will discuss the market for microcredit. in particular, i will focus on initiatives that have been taken in the netherlands. with pride i can say that the netherlands is amongst the frontrunners when it comes to developing and supporting new initiatives in the field of microfinance. the fact that her