Comparison of Microfinance Model in China and Bangladesh

Purpose- the purpose of this paper is to investigate the operational mechanism of key microfinance service providers in Bangladesh and China. It seeks to understand diverse methodologies toward financial inclusion to the poor. Microfinance has played important role in both countries but comparative studies have not been carried out so far.Design/methodology/approach – the study is descriptive in nature. Total six microfinance service providers were taken for critical evaluation consisting three from each country. MSPs were selected according to their greater contribution in respective country.Findings- A little variation on operational mechanism has found among MSPs within the country but a greater variation has appeared between two countries. Extensive difference has exposed in respect to service provision, collateral status, outreach, interest rate, financial sustainability, and regulatory environment which might hindering smooth development of this sector.Research limitations/implication – This paper has compared only few MSPs which may not represent whole countries situation. However, the comparative analysis leads for further methodological improvement of the microfinance institutes in Bangladesh and China.Originality/value – The study adds to the literature on microfinance, more particularly on diverse microfinance models. It will also help microfinance practitioners and policy makers to gain a better understanding on existing microfinance service providers. Finally, the cross country comparison could bring win-win situation for both countries