【正文】 blic investments, such as in primary education . The subsidy dependence index has bee a widely accepted operational measure to quantify the amount of social costs involved in supporting the operations of a financial institution Addressing the policy question of whether such public investments are economically –not financially sustainable requires a parison of social costs with social benefits. This consideration raises welfare impact as an important third objective of microfinance. The triangle of microfinance, which reflects the three objectives of financial sustainability, outreach, and impact, is represented in Figure 1. MFIs attempt to contribute to these objectives (either indirectly through pursuance of financial sustainability leading to scale and serving many clients or directly through targeting poorer segments of the population) but many stress one particular objective over the other two. Donors, governments, and other social investors also differ in their relative emphasis on the three objectives. Some MFIs may produce large impacts (especially if financial services are coupled with nonfinancial services addressing other constraints of the poor) but achieve limited outreach. Others may make smaller impacts but are highly financially sustainable with a large breadth of outreach, and investments in such institutions may have a high cost efficiency in reducing poverty. The potential tradeoffs between depth of outreach and financial sustainability have been noted, but they may also exist between impact and financial sustainability. As Sharma and Buchenrieder argue, the impact of finance can be enhanced through plementary non financial services, such as business or marketing services or training of borrowers that raise the profitability of loan financed projects. Complementary services are sometimes offered by MFIs but supplying them increases the plexity of the operation and its costs, thereby foregoing efficiency gains from specialization and jeopardizing financial sustainability if the additional costs are not covered by borrowers (which almost never happens).There may also be tradeoffs between impact and depth of outreach. The impact assessment studies reviewed by Sharma and Buchenrieder suggest that the very poor can benefit from microfinance largely by smoothing their consumption through improved management of their savings and through borrowing. Those just above or just below the poverty line can use loans more effectively for productive purposes, which ultimately raise their ine and asset base. Thus, expanding financial services may improve the welfare of the very poor, but not necessarily lift them out of poverty because of their lack of access to markets, technology, knowledge, and other factors that expand the production frontier. These potential tradeoffs exist in urban as well as rural finance, and must be addressed when financial institutions develop their business plans and decide between marketing their services to only the very poor, to a mix of clients clustered around the poverty line, or to owners of small and mediumsize enterprises. This raises the question of what oute is considered most socially desirable or optimal. And giving an answer “is a matter of value judgment” (Morduch, 1999c). For example, is public support more desired for MFIs that specifically target the poor, such as those in Bangladesh that use specific wealth criteria in an attempt to exclude those living above the poverty line? These questions on tradeoffs arise when donors and policymakers consider investing in rural are also potential synergies among the three objectives of microfinance policy. First, financial sustainability is likely to be perceived by potential clients as a critical indicator of MFI permanence, and will influence their decision about whether it is worthwhile in the long run to bee and stay clients. Thus, greater financial sustainability can positively influence outreach. This synergy is even more important for savers who must have faith in the permanence of the institution to which they entrust their savings. No one will save with an institution that is considered temporary. Second,striving for financial sustainability forces MFIs to be sensitive to client demand and induces them to improve products, operations, and outreach. Better financial products, in turn, generate greater economic benefits for clients, and thus greater impact. Clearly, both the institutionalist and welfarist group among microfinance have good arguments, and can provide empirical evidence supporting their favored synergies or tradeoffs. However, only a publicwel