Impact Of Microfinance Institutions Research Articles

The Impact of Micro Finance Institutions on Economic Growth of Morocco

The Moroccan banking system is characterized by great diversity and is largely modeled on the French banking system. It includes banks and other institutions working in specialized areas such as, agriculture. At the end of 2011, the banking sector comprised eighty five institutions, with the Bank Al Maghrib (BAM) as its central state institution. This system includes nineteen banks, thirty five finance companies, six offshore banks, thirteen Micro Finance Institutions and twelve other institutions. The total number of banks has not changed since 2009, whereas the number of finance companies has declined. In contrast, the area of microcredit was reinforced. After several years of growth, the microfinance sector in Morocco began to experience some problems in 2008. The crisis in Morocco started with the crash of one of the largest MFIs and jeopardized the whole system. Reasons given for the crisis were mainly the unsustainable growth of the sector, but also the high market concentration of MFIs, multiple indebtedness, the lack of controls and monitoring systems, nonperforming loans and delinquency problems. The microfinance market is very concentrated, and clients are mainly allocated among the four biggest MFIs accounting for over 90% of client outreach. From 2003 the amount of active clients rose from almost 308,000 clients to 1,353,000 clients in 2007.

The Impact of Micro-Finance on the Performance of Small-Scale Enterprises: A Comparison of Sinapi Aba Trust and Maata-N-Tudu Associations in Wa Municipality, Ghana

Literature on the impact of micro-finance institutions (MFIs) on small and medium scale enterprises (SMEs) is still fraught with inconsistent results, with some concluding on positive impacts while others reporting negative impacts. This paper therefore sets out to assess the impact that the study-MFIs are making on their SMEs-client in the Wa Municipality. The withand- without approach, coupled with a quasi-longitudinal approach was employed for the study. Data were gathered from the study-MFIs’ documents and questionnaire administration. Simple percentage change was used as a measure of growth of mean sales revenue. Analysis of variance (ANOVA), Spearman’s correlation coefficient (r) and coefficient of determination were also used in the analyses, with various hypotheses tests. It is concluded that the study-MFIs make positive impacts on the mean sales revenues of their client – SMEs, with great differences between those of SAT and MTA clients on the one hand and those of the control group on the other. A slight difference that exists between the two study-MFIs was accounted for by differences in their management approaches. A strong positive correlation exists between average sales revenue on one hand and micro loans, level of education and training on the other. Keywords : Small-scale Enterprises, Micro-Financing, Micro-Credit, Sales Revenue, Impact

Impact of microfinance institutions on economic empowerment of women entrepreneurs in developing countries

This study mirrored out the effects of Microfinance on economic empowerment of Women Entrepreneurs in developing economies. Descriptive research design was used to assess the extent to which Women economic empowerment co-relates with Microfinance Institutions services. The target population was women entrepreneurs in Micro Finance Institutions (MFIs) within Kakamega C.B.D. Simple random probability sampling was applied to select ten (10) MFIs where four (4) active women entrepreneurs from each MFI was taken, adding to forty (40) respondents. Both primary and secondary data was collected through questionnaires and semi-structured interviews. Data collected was presented by descriptive statistics like pie charts and graphs. From the analysis, the results showed that microfinance services act as a key fulcrum to women entrepreneurs’ economic empowerment. The results were re-affirmed by a linear regression analysis (SPSS version 22). The findings will be used to make policy proposals that will see MFIs meet the economic empowerment needs of women Entrepreneurs to make developing countries progress as Kenya prepares to achieve vision 2030.

Microfinance Institutions and the Core Poor in Bangladesh: A Review of Their Operations

This paper presents the findings of a study that investigated the impact of Microfinance Institutions in Bangladesh on the core poor i.e. those living on less than $1USD/day and the correlation between the presence of these institutions and poverty in the five Divisions that were examined in the country. Bangladesh is one of the most populous countries in the world with a high level of poverty. This study looked into the operations of these Microfinance Institutions between 1995 and 2005 to establish the correlation between their presence and the poverty level in the locations where they have a strong presence and a weak presence. The study looked into the efforts of Microfinance institutions in poverty alleviation to see if they focused solely on the poor or also catered to the challenges of the core (extremely) poor people that had no valuable possessions or collaterals to obtain loans from them in addition to examining the support of the top three Microfinance Institutions for the vulnerable especially poor women in terms of empowerment in the period under review. This paper concludes with implications of the presence of microfinance institutions for poverty reduction in a geographical location and recommendations for further research.

Economic Impact of Micro Finance on Borrowers: Evidence from Punjab, Pakistan

The purpose of this study is to investigate the economic impact of microfinance institutions on borrower households in particular the impacts of small amount of loans in a high inflationary economy like Pakistan. The study is based on primary data and comprises of a sample of two hundred households including borrowers of microfinance institutions and non-borrowers who are eligible to be a client of MFIs. Binary logistic and least square regression is used to find the impact of microfinance on different economic indicators of the borrowers. Logistic regression results indicate positive and significant impact of microfinance on income of the borrower, while the least square regression presents somewhat different results about the impact of microfinance on assets of the borrower households. Independent sample T-test was used to measure the significant difference between clients and non-clients. We found that the economic position of the borrower households of microfinance institutions is better than the non-borrowers.

Great Expectations: Microfinance and Poverty Reduction in Asia and Latin America

Microfinance institutions (MFIs) are often seen by aid practitioners as a manifestly effective means of improving the position of the poor. Despite this widely held view, detailed research studies have been much more guarded about the impact of MFIs. In particular, several studies have raised doubts about the effectiveness of MFIs in reaching the “core poor”. This paper surveys the evidence from Asia and Latin America and contrasts experiences in the two regions. Studies on the former have been carried out more “rigorously”, but in both regions the evidence that microfinance is reaching the core poor is very limited.

Innovations in Microfinance - Looking beyond Income Poverty

unique amalgamation of industrial (including financial) and institutional reforms in the present scenario of development economics. For the developing countries like India it has come as a breakthrough in the philosophy and practices of poverty eradication, economic empowerment and inclusive growth. Yet given the enormity of economic compulsions and complexities in these countries, microfinance is an unfinished agenda. The main objective of this paper, therefore, is to shift the focus from mere financial access to poverty eradication and people’s empowerment, sifting the ‘performance’ of Microfinance Institutions (MFIs) from their ‘popularity’. The typical microfinance clients are low-income persons who do not have access to formal financial institutions. Therefore, there is a tendency among development thinkers and practioners to gauge the impact of MFIs purely in monetary terms, i.e. eradication of income poverty. This is not only a partial view of the potential and purpose of microfinance but also a cause of unbridled growth of MFIs. MFIs have the capacity and responsibility of empower the most vulnerable, such as women, rural artisans etc; to allow the not-yet-economically-active to become so; and to create community-based structures that build mutual support and trust. The argument in this paper is that MFIs by releasing the true potential of its members through social intermediation can ensure building an inclusive society. MFIs have the advantage of combining the good features of both formal and informal credit, even improving productivity and credit-worthiness through the ethics of repayment. The plight of farmers in India and the scenario of suicides need to be examined in this context. For microfinance, therefore there is ethical and economic justification for looking beyond income poverty or to move from financial intermediation to social intermediation. So today we need to not only evolve new products or services under the gamut of microfinance but also explore new frontiers of development, social and economic. This hinges on human development in terms of infrastructure for health, education, skill and enterprise. This is also in-keeping with the Millennium Development Goals (MDGs). The positive signs are already visible. Several MFIs have recognised the need to be socially relevant and active in order to be commercially viable and useful. The Kalinjiam success story is a case in the point. This paper calls for a symbiotic relationship between financial intermediation and social intermediation, to remove the economic and socio-cultural barriers to empowerment, inclusion and development. Inclusive growth requires not only physical, natural and human capital, but also social capital. Also further research is need to a have a reality check of ‘what is really happening’, uniquely exploring both social and financial performance in the MFI sector in general and Self-Help Group (SHG) movement in particular.

Great Expectations: Microfinance and Poverty Reduction in Asia and Latin America

Microfinance institutions (MFIs) are often seen by aid practitioners as a manifestly effective means of improving the position of the poor. Despite this widely held view, detailed research studies have been much more guarded about the impact of MFIs. In particular, several studies have raised doubts about the effectiveness of MFIs in reaching the “core poor”. This paper surveys the evidence from Asia and Latin America and contrasts experiences in the two regions. Studies on the former have been carried out more “rigorously”, but in both regions the evidence that microfinance is reaching the core poor is very limited.

The impact of microfinance institutions in local financial markets: a case study from Kenya

AbstractThis paper looks beyond the direct impact of microcredit provision on users to examine whether microfinance institutions (MFIs) have had wider impacts within the local financial markets in which they are operating. It considers the potential for both competition and demonstration effects on other financial providers. In the context of local financial markets in and around the small town of Karatina in Central Kenya, supply side information is used to investigate the key changes in provision between 1999 and 2003. The paper concludes that changing macroeconomic conditions have been the main driver increasing competition for middle and lower income clients and that few competition or demonstration effects resulting from the MFIs are in evidence. Copyright © 2004 John Wiley & Sons, Ltd.