COMPARATIVE ANALYSIS OF THE FINANCIAL PERFORMANCE OF THE MICROFINANCE AND BANKING SECTORS

Micro-crediting involves providing small loans and other financial services (such as micro-savings and micro-insurance) to the poorer parts of the population, for the purpose of self-employment or starting up own business. The mission of microcredit institutions is providing loans to the segments of the population that do not have access to banking services. In order to more fully understand the concept of microcredit, it is necessary to examine similarities, differences, and relative advantages and disadvantages of microfinance compared to banking services. The main objective of this study is thus to provide a comparative financial analysis of the microfinance and banking sectors in Montenegro. The main research method used in this study was a comparative analysis of the two sectors. The results of this research could potentially provide an answer to one of the most controversial questions in the field of microfinance studies, which is how the microfinance sector operates from the financial standpoint, considering that microfinance clients are "high-risk" and have previously been denied a bank loan.