Journal of Microfinance / ESR Review


Savings and credit cooperatives (SCCs) provide a variety of micro-finance services to households in three of Nepal's distinct regions—the Hills, Terai, and Kathmandu Valley. Nearly all Nepali SCCs are self-funded using member savings and equity. Most Nepali SCCs are also profitable, including those located in poor, remote areas of the Hills region. Key reasons for the SCCs' strong financial performance include reliance on member savings and control of administration costs. High-profit SCCs also show superior interest earnings on loans compared to low-profit SCCs. Nepali SCCs do not need concessionary funds, because they are already profitable and able to mobilize member savings. While savings-led microfinance in Nepali SCCs is a slow process, there is significant long-term outreach potential in local communities. The government and donors should pursue institution-building strategies to strengthen Nepali SCCs and should not provide concessionary funding.


Chris D. Gingrich is a Professor of Economics at Eastern Mennonite University, Harrisonburg, Virginia.



Journal Title

Journal of Microfinance

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