Microfinance in Armenia: Sector Characteristics and Adaptation Strategies

This study uses qualitative research to explore the main characteristics and adaptation strategies of the microfinance sector in Armenia. The research is based on the insights collected from semi-structured interviews with experts in 11 regulated Armenian MFIs and commercial banks offering microfinance services. The findings indicate that the emergence of MFIs was subject to offering a complementary effort in filling the gap in the financial services industry. The paper also suggests that the microfinance sector in the country is relatively new and is segmented with different programs serving different populations. It states that the sector will progress better when certain obstacles will be removed. The paper covers the following sections in detail:

• Country profile and main macroeconomic indicators of Armenia with a focus on political overview, economic structure, and financial sector of the country;
• Methodology of the study with a focus on research design and data collection and analysis techniques;
• MFI community in Armenia with a focus on evolution of the microfinance market and the key actors in this sector;
• Identification of the challenges in the sector including the available range of microfinance services, unequal coverage in terms of geography, interest rate regulations, unequal VAT treatment between commercial banks and MFIs, and lack of state support.