Microfinance beyond group lending

Microlending is growing in Eastern Europe, Russia and China as a flexible m eans of widening access to financial services, both to help alleviate pover ty and to encourage private-sector activity. We describe mechanisms that al low these programmes to successfully penetrate new segments of credit marke ts. These features include direct monitoring, regular repayment schedules, and the use of non-refinancing threats. These mechanisms allow the programm es to generate high repayment rates from low-income borrowers without requi ring collateral and without using group lending contracts that feature join t liability. JEL classification: D82, L14, O12, O17.