A methodology for the assessment of potential demand and optimal supply of entrepreneurial microcredit

Abstract

We propose a methodology for the assessment of potential demand and optimal supply for microcredit. We show that the total demand is a combination of the demand that stems from the active poor plus the demand generated by a motivator agent among the entrepreneurial non-motivated poor. We use French data to provide an illustration of the assessment of potential demand for microcredit. We also show that the proportion of the potential demand satisfied by a microfinance institution depends on its objective i.e. either it is socially oriented or a profit maximizer.