This paper examines the main conduits of contagion of the financial crisis to the microfinance sector worldwide and assesses the impact that the crisis will have on the sector.  It lays out an overall framework for assessing the impact of the crisis on the sector, which analyzes the effects on both the liability side (access to finance, cost of funding, financial risk) and the asset side (portfolio growth, portfolio risk, portfolio quality) and elaborates some recommended policy responses.  The paper is based a survey of microfinance fund managers; interviews with investors, fund managers, MFIs, networks, DFIs and other industry practitioners; and a desk analysis of various macroeconomic factors that are likely to impact the microfinance sector and its clients, including foreign capital flows, current account data, employment, commodity prices, migrant flows and remittances, foreign exchange risk, and inflation risk.

For the complementing, more in-depth microREPORT on the global credit crisis, please click here.