STRATEGIES FOR RISK DIVERSIFICATION IN MICROFINANCE INSTITUTIONS AND THEIR IMPACT ON THE RESILIENCE OF THE SECTOR IN THE REPUBLIC OF MOLDOVA

Abstract

Microfinance institutions (MFIs) play a crucial role in promoting financial inclusion and supporting vulnerable groups in the Republic of Moldova. However, the sector faces multiple challenges related to credit risk concentration, liquidity fluctuations, regulatory pressures, and macroeconomic instability. This paper analyzes the strategies of risk diversification applied by MFIs and assesses their contribution to strengthening sectoral resilience. Particular attention is given to the impact of innovative financing mechanisms, such as blended finance and guarantee schemes, in reducing vulnerability to external shocks. Empirical evidence from the Moldovan microfinance market indicates that institutions with a diversified risk management framework demonstrate higher financial stability, lower default rates, and greater adaptability to crises. The findings suggest that fostering risk diversification strategies not only enhances the sustainability of microfinance institutions but also contributes to the resilience of the national financial system as a whole. The article was developed within the framework of Subprogram 030101 „Strengthening the resilience, competitiveness, and sustainability of the economy of the Republic of Moldova in the context of the accession process to the European Union”, institutional funding.

JEL Classification

G21, G32, O16, E44, Q01

Keywords

risk management, microfinance institutions, research, sustainable, resilience

How to cite

POPA, Viorica (2025). STRATEGIES FOR RISK DIVERSIFICATION IN MICROFINANCE INSTITUTIONS AND THEIR IMPACT ON THE RESILIENCE OF THE SECTOR IN THE REPUBLIC OF MOLDOVA. Journal of Financial Management and Economics, 13(1), 145-155. DOI: 10.65672/jfme.2025.1.13.

RePEc record

Handle: Repec:vls:rojfme:v:13:y:2025:i:1:p:145-155