Microcredit Loans Research Articles

Effect of COVID-19 pandemic on gender based violence: a study on TMSS microcredit members

The present study was aimed at investigating if the COVID-19 outbreak had an impact on gender-based violence (GBV) among TMSS microcredit users. The study was designed to gather data using both quantitative (individual interviews) and qualitative (Focus Group Discussion) method. One hundred and eighty-five married women of Bogura district made up the sample. The sample included 159 microcredit members and 26 non-members. Majority of the participants experienced financial hardships during the COVID-19 epidemic, according to quantitative and qualitative data. Quantitative data showed that a significant portion of microcredit participants (56%) experienced physical, mental, or both types of violence from their husbands during the lockdown. However, the TMSS Microcredit members had greater exposure to GBV than non-members, according to qualitative findings. The same factors—such as income loss, staying at home constantly, and concern about providing for family needs—were highlighted by both microcredit members and non-members as probable causes for the rise in violence during lockdown. But microcredit members mentioned that the lack of microcredit loans and the pressure to make loan payments also resulted in violence against women during lockdown. Quantitative data also indicated that women who experienced violence from their husbands had trouble accessing medical care and law enforcement support. The present study recommended that during emergency situation the microcredit providers should take different policies to help people cope with their financial crisis and government and non-government organizations should take safeguards to prevent gender based violence. Dhaka Univ. J. Biol. Sci. 33(1): 57-65, 2024 (January)

Women’s Struggles for Empowerment in Bangladesh

Women have made substantial gains in health, education, and political representation in Bangladesh, which has been led by female prime ministers since 1991. Women play a key role in the garment industry, the country’s main export sector, and entrepreneurial ventures funded by microcredit loans have also boosted women’s empowerment. But entrenched patriarchal norms have pushed back against these changes, limiting women’s mobility, their presence in public spaces, their sexuality, and their reproductive choices.

Lifestyle Transitions in ‘Monga’-Affected Regions: A Micro-Level Study in Northern Bangladesh

This study examines the gradual lifestyle changes in the Monga-affected regions of northern Bangladesh, focusing mainly on the Nilphamari district. Monga, a cyclical phenomenon, exacerbates unemployment, food shortages, and poverty, forcing many agricultural workers to abandon farming. This research explores Monga's impact on vulnerable populations and their coping strategies, including migration to urban areas for low-wage employment. A qualitative methodology was employed, including in-depth interviews and focus group discussions with 30 randomly selected respondents from Dimla Upazila in the Nilphamari district. Findings reveal that illiterate labourers and marginal and landless farmers are most affected, often migrating to cities seasonally for survival despite harsh conditions, relying on microcredit loans and the mercy of nature. Lifestyle changes at both the micro and macro levels are found in Monga-affected zones; changes include variations in consumption, livelihood, challenges, and social costs in personal and community relationships and diversification in agriculture. Government and NGO interventions play a critical role in alleviating these challenges by creating alternative employment opportunities. The study's limitations include a small sample size and geographical focus, which may limit the generalizability of its findings. However, the practical implications suggest that targeted interventions can mitigate Monga's impact, offering valuable insights for policymakers. This research provides original insights into the socioeconomic transformations caused by Monga, shedding light on the survival strategies of the affected population.

Risk Assessment for Reimbursement of Microfinance Institutions

Purpose: Understanding the repayment behavior of the borrower is very important to the lending decisions of financial institutions and thus helps to promote the development of microfinance. This paper examines the factors that affect the repayment default of microfinance in Tunisia. Theoretical framework: Some studies highlight the importance of incorporating macroeconomic conditions for the estimation of borrowers’ credit risk (Bellotti & Crook, 2013). However, IADB (2020) announced that after the start of the Covid-19 pandemic in the region, microfinance institutions had restricted liquidity, which affected the availability of credit. Therefore, for the purpose of the present article, the literature on default in MFIs analyzes the credit risk and factors that influence granted loans Design/Methodology/Approach: We carried out a survey, with a non-stratified sample of 320 microcredit beneficiaries, during 2021 in Enda-inter-Arab agencies located in the region of Sousse- Tunisia. We introduce a binary logistic regression model to predict the values taken by a discrete variable from a series of continuous or binary explanatory variables. Findings: We show that borrowers’ socioeconomic characteristics, total loan, repayment period and past participation in microcredit loans have significant impacts, as special features, on their default rates. Research, Practical & Social implications: This paper has been designed to provide some valuable contributions in improving the repayment performance and can be significant political involvement, derived from the strong relationship between the level of poverty and the success of loan repayments. Indeed, the level of borrowers’ poverty must be given considerable weight before the loan is disbursed. Originality/Value: The results indicate that the qualification and age of the workforce should be considered a basic requirement before the granting of loan. In addition the microfinance institution's credit policy should also consider service projects a priority.

Effects of Microcredit on Micro, Small and Medium Enterprises Performance in Tanzania with Reference to Selected MSMEs in Iringa Municipality

The purpose of the study was to assess the effects of microcredit on Micro, Small and Medium Enterprises (MSMEs) performance in Tanzania, with reference to selected MSMEs in Iringa Municipality specifically, to examine the contribution of the loan amount on the performance of MSMEs, to examine the influence of interest rate on the performance of MSMEs and to determine the effect of initial capital on the performance of MSMEs. The targeted population was 874 MSMEs benefiting from microcredit services from Iringa Municipality, where a sample size of 274 MSMEs was drawn. A descriptive research design was employed, and a quantitative approach was applied to analyse data. Stratified sampling technique, simple random technique and Convenience sampling technique were used to select loan benefiting. The findings revealed that loans benefiting MSMEs at Iringa Municipality receive loans from financing institutions and use them to improve performance. Moreover, the study found that interest rate has no statistically significant on the performance of MSMEs in Iringa Municipality. In addition, findings revealed that there was statistical significance in the effects of initial capital on the performance of MSMEs. In the case of the normal regression output, the adjusted R2 equals 0.698, implying that the model explains about 69.8% variations in MSMEs performance. The study recommends that the Government should ensure that MSMEs receive appropriate loan amounts and should take proactive measures to regulate interest rates on microcredit loans. MSMEs should have a clear strategy for how these funds will be used. Financing institutions should recognise that loan provisions to MSMEs should be based on the specific needs of the business. Also, they should provide micro-loans at competitive rates that balance affordability for MSMEs and sustainability for the institution. For further studies, the researchers should conduct similar research in different regions or countries that will allow scholars to ascertain the general ability of the findings. Also, the researchers should conduct longitudinal studies that can provide invaluable insights into the long-term effects of microcredit on MSMEs’ performance

Covid -19 Pandemic in India and Impact of Microfinance Companies and Non Financial Banking Companies Microcredit Loans to Poor's Households through the Self Help Groups (SHG) in West Bengal State and also in India

Covid -19 Pandemic in India and Impact of Microfinance Companies and Non Financial Banking Companies Microcredit Loans to Poor's Households through the Self Help Groups (SHG) in West Bengal State and also in India

Determinants of Microcredit Use among Small-Scale Farmers in Ethiopia: Evidence from Raya kobo Woreda, Ethiopia

Background: This study was fully conducted through primary data collected from 385 small scale farm household heads. Those farm household heads were determined by the Cochran formula of sample size determination and selected thorough three stage probability sampling. Result: The result of the study was obtained from binary logistic regression model and states that gender, age, education, family size, dependency ratio, oxen ownership, irrigation, extension service, membership of social organization, total asset, remittance, economic shocks, purpose of credit use, perception for group lending, organizational procedures and distance from the town were important factors influencing small-scale farmers access to micro credit in the study area. The rest factors, those are marital status, farm size and soil fertility were less powerful in explaining smallholder farmers’ access to microcredit loans. Conclusions: Therefor the expansion of irrigation scheme and reduction of bureaucratic procedures to develop new rural institution plays a great role in the creation and expansion of non-farm activities and increase access of microcredit use. Keywords: Irrigation scheme, Logistic regression, Micro-credit, Raya kobo DOI: 10.7176/JESD/13-11-02 Publication date: June 30 th 2022

Comparative profitability and relative risk of adopting climate-smart soil practices among farmers. A cost-benefit analysis of six agricultural practices

The adoption of climate-smart soil (CSS) practices among farmers have the potential to rehabilitate and protect the soil. Proponents have not fully addressed factors such as; profitability and the relative risk that farmers face during the adoption and implementation of these CSS practices. These factors determine the adoption and sustainability of these practices. This study assessed the comparative profitability and relative risk of implementing CSS practices among farmers in Kakamega, Siaya, and Bungoma counties in Western Kenya. The prioritization of these CSS practices (agroforestry, intercropping, liming, organic manure use, inorganic fertilizer, and improved hybrid seeds) was based on the climate-smart agriculture (CSA) pillars (production, adaptation, and mitigation) and their benefits. A deterministic cost-benefit analysis model that incorporates sensitivity and scenario analysis assessed these factors. The findings showed that agroforestry was the most profitable having a net present value of US$ 16,071 ha−1, followed by intercropping (US$ 10,487 ha−1), and the use of improved hybrid seeds was the least profitable (US$ 881 ha−1). In terms of relative risk, all the practices were more sensitive to the product price and output than the lifespan, discount rate, and labour cost. The result implies that exposure of these practices to climatic and economic shocks will result in high-profit risk. Therefore, national and county governments should place micro-credit loans with minimum interest, input subsidies, and skilled personnel to promote increased adoption of agroforestry and intercropping. Agricultural extension officers should also demystify farmers' mentality that improved hybrid seeds can guarantee increased productivity.

Delving into the Determinants of Default Risk in Savings Groups: Empirical Evidence from Ecuador.

Financial inclusion has been broadly recognized as critical in alleviating poverty and achieving inclusive economic growth. The capability of borrowers to repay their microcredit loans is a critical concern and is the first risk of Microfinance institutions sustainability. Exploring the determinants of credit risk is an issue of substantial importance in microfinance. The purpose of this research was to identify the savings group members’ characteristics that have impact on default risk. We have used a multivariate regression model to identify the factors that affect default behaviour among microcredit borrowers from savings groups. We have analysed a sample of more than different 400 Savings Groups and 7251 active users of the “Saving and Learning” program in Ecuador. Empirical results demonstrated that factors such as seniority, accumulated savings and the number of members in the savings groups are determinant variables of default risk. The significant positive sign on variable “Gender” is consistent with the previous authors that indicate that the probability of having problems in loan repayment is higher for males than for females. The generalizability of our findings should, of course, be interpreted with caution, as they may be idiosyncratic of the sample, period or region. To contrast and contextualize these results, we had in-depth discussions with the Savinco managers and their field agent in Ecuador. There are many contributions. For practitioners, relevant factors that can affect savings groups default rates have been identified. For academics, the rich information provided by the Savinco mobile App could be a starting point for further quantitative research.

Revisiting Globalization Through Dalit Women Perspective

The relation of globalization with social and economic empowerment of Dalit women is a highly contested issue especially when they continue to be victims of discrimination on the basis of their caste, class and gender. One of the major innovations of globalization in India is the microcredit loans and Self-Help Groups (SHGs) that were formed with the aim of increasing the financial independence of Dalit and poor Indian women. Although increasing number of women participate in SHGs, I argue that it is the Dalit women who do not receive their adequate benefits due to the existing division between Dalit and non-Dalit women, the role of the intermediaries and the subordination that is inflicted upon them by Dalit men. Finally, this study concludes that it is only when reforms are built specifically targeting the plight of Dalit women, then they will bring a change in their social and economic status.

Patterns of loan use for women’s self-help groups in rural Rajasthan

In spite of numerous impact evaluation studies of microcredit, there is no consensus about its poverty reduction capacity. In part, this confusion is the result of a futile quest to construct a singular narrative of impact, whereas the focus should be on understanding the range of experiences in particular geographies and contexts. In this paper, we study the ways in which participants used their loans by drawing upon semi-structured interviews with self-help group members to examine the poverty reduction potential of a microcredit program in two villages of Rajasthan, India. We unpack the impact of duration of program participation on loan use, and examine pathways to productive loan use, an indicator which signifies poverty alleviation. Although we did not find significant evidence of poverty alleviation, program participation had a positive impact on respondent households: a) an increase in the capacity of respondents to use loans for second-order consumption with increasing lengths of time in the program, and b) an increase in the amount and frequency of available credit for consumption smoothing and crises. We contribute to the extant literature on the impact of microcredit by presenting a granular analysis of loan use by differentiating between three kinds of consumption uses. We also discuss obstacles and enabling factors for productive loan use at the household and individual level, and problematize the application of the binary yardstick of consumption and production to assess the use of microcredit loans by the rural poor in the developing world.

Interest rate caps on microcredit: evidence from a natural experiment in Bolivia

ABSTRACT This paper evaluates the imposition of caps on microcredit lending rates through credit policies for productive sectors. This financial inclusion intervention provides a unique quasi-experiment, allowing to estimate its effect following a difference-in-differences analysis. Our results suggest that the imposition of interest rate ceilings negatively affected the portfolio balance of new microcredits and loans to Small and Medium Enterprises (SMEs) granted by Micro Finance Institutions (MFIs). The balance of the microcredit and SME loans portfolio granted by MFIs, relative to the company portfolio granted by banks, decreased by 26.1% for an average MFI for the period 2011-2018.

Microcredit programs may increase risk to pastoralist livelihoods in Inner Mongolia.

The literature on microcredit programs has largely focused on positive socioeconomic outcomes and low accessibility issues in farming areas and has provided less insight into the effects of easily acquired microcredit in pastoral areas. Using a case study approach, and econometric models, this paper addresses this gap by examining why and how easily acquired microcredit loans in Inner Mongolian pastoral areas increase the risk to the financial security of households or livelihood risk. Results show that existing microcredit programs increase livelihood risk because loan and repayment requirements do not align with the husbandry production cycle of contemporary Inner Mongolian pastoralists. This misalignment forces pastoralists to borrow from usurers to repay bank loans. Furthermore, households that need to borrow from usurers typically own smaller numbers of livestock and are less likely to be able to repay the usurers by selling animals. Instead, they tend to increase their bank loans in the coming year to repay the previous year's debt, trapping them in a vicious and ultimately impoverishing circle of annual loans they cannot fully pay back, and feeding increasing debt. We suggest that microcredit programs in semiarid areas should be in sync with the local production cycle and recognize environmental constraints that cause high variation in production seasonally and year to year. Our results supplement previous findings on microcredit applications and are particularly pertinent for other semiarid areas of the world.

Experimental financial inclusion as refugee management: shelter insecurities at the bottom of the pyramid in Kenya

Kenya was amongst the first countries in the world to undergo structural adjustment programmes in 1980 leading to welfare retrenchment and the lack of social safety nets for many of its urban poor. This article shows how refugee hosting in Kenya has coincided with ongoing statewide neoliberalisation. With lack of state-led welfare support, and diminished global aid for a nearly three-decade long encampment in Dadaab and Kakuma, refugees have no choice but to turn to the private sector for shelter aid through microcredit loans especially in major urban centres. This article shows how neoliberal policies dovetail with refugee governance in Kenya by examining the deployment of financial inclusion strategies on multiple scales. Drawing upon fieldwork in 2018, I argue that refugee assistance intersects with the needs of private capital where refugees, due to their social marginality, are prone to experimentation in terms of financial inclusion. Housing microfinance, an ineffective guarantor of long-term refugee shelter, and new technologies of financial inclusion exemplify neoliberal experimentation and illustrate how these strategies fail to ensure the long-term survival of refugees.

The Relationship between Agricultural Credit, Regional Agricultural Growth, and Economic Development: The Role of Rural Commercial Banks in Jiangsu, China

ABSTRACT This paper examines the relationship between different forms of agricultural credit, regional agricultural growth, and regional economic development. The sample we study consists of 51 rural commercial banks operating in Jiangsu Province, China. For analytical purposes, a random-effects (RE) model and the generalized method of moments (GMM) are employed to analyze agricultural credit’s relationship to regional agricultural and economic growth. Our results reveal that overall agricultural loans have a significant positive effect on both regional agricultural and economic growth. Furthermore, loans to farmers and rural enterprises also have a significant positive relationship to both regional agricultural and economic growth. Moreover, farmers’ microcredit loans and student loans, rural individual industrial and commercial household loans, and other types of loans to farmers also have a significant positive relationship to regional agricultural growth. The latter two types also have a significant positive relationship to regional economic growth. We conclude that promoting agricultural credit from rural commercial banks stimulates regional agricultural growth and overall economic development in Jiangsu Province.

State of Civil Society and NGOs in Bangladesh: Examining the Recent Trends and Changes

This paper is the outcome of a revisit study conducted in 2016 in three locations of two districts in Bangladesh. The original and/ or the 1st study was conducted in the same locations using same objectives and methods in 2005. The main purpose of the revisit study was to perceive the changes taken place in relation to the civil society space and activism, and the state of activism of NGOs. Qualitative approaches were used in collecting primary data from field and secondary sources were also used. The revisit study finds that NGOs are increasingly offering support to non - poor borrower groups, and today less emphasis is placed on offering small loans to the disadvantaged. The provision of larger loans (than the micro-credit loans encountered earlier), support to small businesses, and the appearance of migration support loans. In other respects, civil society space has been reduced in 2016. In 2005 we found rights-based works on the road to room for maneuvering, such as legal aid, we also found a civil society had been more politically focused, with the power to influence local officials in some cases. The 2005 study also found that with various civil society actors (services, rights, social mobilization and advocacy) a kind of dynamism in the stage, there was an opening of space indeed. On the other hand, the revisit study 2016 observed the shrinking state of civil society space. Rights-based NGOs and informal civil societies are at significantly reduced state; and it was found the social mobilization by the non-government organizations and agencies has a very slim opportunity to reinstall their activities in civil society space in near future. Extreme political control over institutions and citizens’ rights-based activities may be attributed as the main reasons of halting civil society action in Bangladesh.

Does counter‐guarantee affect microcredit mechanism's performance on repayment? Evidence from Guangzhou, China

AbstractWe study the credit repayment effectiveness when microcredit is operating in combination with the counter‐guarantee mechanism. We use a sample of 176 poor urban borrowers from the Guangzhou Municipal Labor and Social Security Bureau (GZMLSSB). Their loans were guaranteed by the Guangzhou Financing Guarantee Center (GZFGC), then counter‐guaranteed by borrowers. The size of loans offered to urban borrowers varies from 20,000 RMB to 30,000 RMB per individual per year (60,000 RMB if part of a partnership and maximum of 50,000 RMB per individual in a given loan cycle). We estimated the model using a conditional mixed process given the binary dependent variable and a binary endogenous explanatory variable in the model. We find that the real estate mortgage as a financial counter‐guarantee mechanism has no effects, but a training certificate as a non‐financial counter‐guarantee mechanism has a negative impact on the microcredit repayment rate. Group lending and focusing on women have no impact as well. The findings help to minimize the management cost of pre‐default and default risk on microcredit loans in GZMLSSB and other similar projects by targeting university graduates. Our study is the first to assess the impact of microcredit mechanisms together with counter‐guarantee on loan repayments in China.

Post-War Development and Women’s Empowerment in Eastern Sri Lanka: A Case Study of Batticaloa District in Eastern Province

The civil war in Sri Lanka had caused enormous impacts on the physical as well as infrastructure development of Eastern Province. Since the end of war in 2009, the province has immensely benefitted from the state and non-state sectors, particularly in the sphere of women empowerment in terms of their livelihood, education, health, etc. Although, many previous studies have delved into a number of post-war development interventions in the province, it failed to explore the dimension of women’s empowerment. Using both qualitative as well as quantitative methods, this study specifically explores the impacts of socio-economic development initiatives on women’s empowerment in the post war context. The findings show women received much support such as housing assistance, dry rations, livelihood assistance, micro-credit loans and psycho-social counselling from state and non-state sectors including NGOs, and UN organizations in the post war period in the Batticaloa district of Eastern Province and such supports have largely been effective as it contributed to women’s empowerment. Nevertheless, such supports have significantly dried up in recent times with priorities of state and non-state sectors being shifted. Thus, it is crucial for state and non-state sectors to focus on the empowerment of women in future, especially enhancing their capacity in terms of their knowledge and skills, and providing financial assistance for their self-employment on a soft loan basis or under grant schemes.

Credit lines in microcredit: Short-term evidence from a randomized controlled trial in India

We study the short-term effect of flexible microcredit loans on small businesses. We use data from a randomized controlled trial that offered a credit line product to street vendors in India. The credit line retains standard features of microcredit such as joint liability, female borrowers and weekly meetings, but allows flexible borrowing and repayment, like a credit card. We find a positive effect on the vendors' gross profits: on average, a credit line increases profits by 7 percent compared to a standard microcredit term loan. The profit differential increases with time since loan disbursal, to about 15 percent after 18 weeks. The observed increase in profits appears to be mainly driven by the credit line allowing more flexible borrowing and repayments, and allowing vendors to invest in more profitable goods. Our findings highlight providing flexible loans as a viable strategy for raising the impact of microcredit.

Do Microcredit Loans Do What They Are Intended To Do? A Case Study of the Credit Village Microcredit Programme in China

AbstractThe purpose of this study is to assess if the credit village is an effective way to develop a microcredit programme in China from the perspective of poverty reduction policy and risk monitoring. Cross‐sectional household survey data from three credit villages in the Yunan County of China are analysed using 3SLS and IV probit models. The major finding is that the credit village loosens credit restrictions to some extent. However, it has no impact on educational expenditures, medical expenditures, long‐term assets, short‐term assets and women's rights. It is our observation that the microcredit programme in China needs more innovation to become effective. © 2020 John Wiley & Sons, Ltd.