International Debt Financing and Microfinance: A Performance Review

This essay examines the impact of international debt financing on the performance of microfinance institutions, focusing on the correlation between debt financing and microfinance for small-scale entrepreneurs. It analyzes whether financial sustainability has led to the emergence of microfinance in the context of debt financing, targeting an audience of entrepreneurs, MFIs, and stakeholders. The article highlights the relationship between international debt and social performance, emphasizing features and performance metrics that attract international investments, segmented into commercial and subsidized debt. While the article provides a foundational understanding of the drivers in the international debt market and microfinance, it is noted that it leans heavily on subsidized funding, potentially diverting from the core concept of debt financing. Despite this, the author's assertion regarding debt financing for small-scale entrepreneurs is valid, and the article serves as a starting point, encouraging further research into the impact of international financing on microfinance and debt financing.

International Debt Financing and Performance of Microfinance Institutions
Commercial funding or debt finance has assumed a place of particular importance as
it is attracting new investors and directly associated with the profit scenario of the company.
The main topic question is that of international debt financing and the performance of the
microfinance institution (Mersland and Urgeghe , 2013). However, debt financing and micro-
finance have been highly correlated because for the micro entrepreneurs, the debt financing
appears in the form of microfinance (Escho et. al, 2001). The main topic question is that
whether financial sustainability has led to the emergence of microfinance in the light of debt
financing.
The intended audience of the author comprises of small-scale entrepreneurs, MFIs,
and stakeholders. The article sheds light on the concept of international debt, as well as social
performance that is highly correlated. As per the article, the entire view of the author
focussed mainly on the target audience, those who have a strong inclination towards the debt
financing. Hence, the intended audience is more of the related parties to finance and funding
(Mersland & Urgeghe, 2013). The small-scale entrepreneurs, business, and other stakeholders
are well directed from the article. Moreover, the author tends to stress more on the concept of
microfinance which provides utmost help to the small-scale business and entrepreneurs.
Going by the article, it can be said that the international funders of microfinance have a
bearing on both financial and social bottom lines through the process of investments. The
valid thing that can be noted is that of the features and performance in an MFI that leads to
the attraction of international investments. Further, it is segmented into commercial, as well
as subsidized debt. On the other hand, there are some invalid concepts in the article. The

International Debt Financing
article seems to be just an initial movement in knowing the drivers of international debt
market and microfinance and some limitations are observed. The article tends to rests more
on the concept of subsidized funding, and hence, the article moves away from the main
concept that is the debt financing (Peirson et al., 2011). From the normal course of action, the
article should comprise international investment and subsidized debt which is altogether
missing from the article (Mersland & Urgeghe, 2013).
Going by the overall discussion and the notion of the article, it can be commented
that the stress of the author is towards the concept of debt financing of small-scale
entrepreneurs. Further, the entire article is based on microfinance (Lensink et al., 2011). The
author assertion regarding the debt financing is correct and has correctly aimed towards the
functioning of small-scale entrepreneurs. The assertion regarding the targeting strategy is
well directed because the funding needs to be properly directed towards the ones that has a
strong requirement for it (Mersland & Urgeghe, 2013). However, the article is just the
fundamental step in providing a direction and motivates more research into action. It is even
clarified at the end of the article that the international financing of microfinance and debt
financing has created a positive impact in the market.
2

International Debt Financing
References
Esho, N., Lam, Y., & Sharpe, I.G. (2001). Choice of financing source in international debt
markets. Journal of Financial Intermediation. 10(3), 276-305. Retrieved from
https://doi.org/10.1006/jfin.2001.0318
Lensink R., Hermes N., & Meesters A. (2011). Outreach and efficiency of microfinance
institutions. World Development. 39(6): 938–948. Retrieved from
https://EconPapers.repec.org/RePEc:eee:wdevel:v:39:y:2011:i:6:p:938-948
Mersland, R., & Urgeghe, L. (2013). International debt financing and performance of
microfinance institutions. Strategic Change. [online]. 22. Doi:10.1002/jsc.1919.
Peirson, G, Brown, R., Easton, S., Howard, P., & Pinder, S. (2015). Business Finance, (12th
ed). North Ryde: McGraw-Hill Australia.
3