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A Regional Analysis of Credit Needs and the Unmet Demand for Microfinance


AS De Alwis

About AS

Ms. Sharmini de Alwis is the Additional Director of the Statistics Department of the Central Bank of Sri Lanka. She graduated from the University of Peradeniya Sri Lanka with BA (Honours) and also obtained a Post-Graduate Diploma in Mathematics from the same University. She obtained a MA degree in Economics from the University of Western Ontario, Canada. Her major research interests are Poverty, Nutrition and Microfinance.

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This paper compares and contrasts borrowing patterns of households at the bottom of the pyramid with those of the non-poor in the seven provinces, Western, Central, Southern, North Western, North Central, Uva, and Sabaragamuwa in order to determine the features required to be incorporated in microfinance products to make them low-end market friendly. The information reveals that regional disparity is much greater than income wise disparity in borrowing patterns pointing to the fact that there is no strong case for designing specific loan products for the poor. Overall however, as expected, the poor had lesser access to institutional credit and expended proportionately more of their borrowing for consumption and other non-productive purposes than the non-poor. However, financial inclusion among the poor was found to be much greater in this country when compared to other countries in the region. Despite high financial inclusion among the poor, both the poor and the non-poor tend to borrow from the informal sector as well, particularly from friends and relatives. The poor in the Southern Province had greater dependence on informal sector credit despite the high financial inclusion reported from that province. Figures on financial inclusion indicate that the number of households still to be reached by poverty alleviation microfinance programmes in these seven provinces was below 300,000. Resource requirement for initial loans to be provided to these persons in order to enroll them in a poverty alleviation microfinance programme was estimated to be less than Rs. 6 billion.


Staff Studies Vol.39(1&2) 2009 pp.37-67

Keywords: microfinance
How to Cite: De Alwis, A., 2011. A Regional Analysis of Credit Needs and the Unmet Demand for Microfinance. Staff Studies, 39(1), pp.37–67. DOI:
Published on 24 Jun 2011.
Peer Reviewed


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