Abstract
Microloan determines the methods, that create opportunities to offer micro loans to very poor families in order to help them realize their productive activities and offer them the possibility to develop small businesses. Microfinance is not limited to offer small loans to the poor, but also a wide range of financial services to all of which are excluded from the classic financial system. The Albanian financial sector is not only dominated from the commercial banks, but also from a high number of non commercial financial institutions (16 commercial banks, 27 noncommercial banks, 1 representative of foreign banks, 397 exchange offices, 111 credit union associations and 2 credit union association.) (Bank of Albania, 2015). Microfinance institutions cover especially rural and sub urban areas focusing their services in areas, where financial services lack. Particularly in rural areas is proven that these financial institutions have helped farmers to overcome the emergency phase and, subsequently, have spurred development, creating some of the first financial structures in rural areas, as well as enabling villages to manage loans and other development projects. (Salko D., 2000). The article purpose is related to the future of the microfinance system in the country as a necessity for them to have more consolidated structure in terms of legal framework (transforming them into commercial banks) and the possibility to offer lower interest rate for the offered services. If the first structure is linked to the core changes of these institutions and the second is offering a strategy for market adjustment strategy. DOI: 10.5901/ajis.2016.v5n3s1p451
Highlights
In its early start microfinance was formed voluntarily to help the people in need
According the Jean Philippe de Screvel: “Commercialization is not a goal itself, but ensures effective products and financial services”. In reality it suggests that microfinance can be a profitable business with effective interest rates at market level and the loan re payment to be at 97% rate, which is much higher than the commercial banks
Our work will be realized through factorial analysis, because we will start from the phenomena and real microfinance cases in Albania and worldwide to explain the phenomena in general, which is linked to the transformation into long term and sustainable institutions with commercialized profile
Summary
In its early start microfinance was formed voluntarily to help the people in need. nowadays it represents a market solution for poverty reduction. According the Jean Philippe de Screvel: “Commercialization is not a goal itself, but ensures effective products and financial services” In reality it suggests that microfinance can be a profitable business with effective interest rates at market level and the loan re payment to be at 97% rate, which is much higher than the commercial banks. At this level we raise the questions below: 1. Microfinance Institutions play a major role they have a disadvantage in terms of higher capital costs They should seek to reduce the overall lending costs to balance the high operations costs caused by small amounts of loans. This means that a microfinance institution has much more operational expenditures on staff, logistics etc
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