Microfinance Companies Research Articles

Islamic finance in the post-Soviet Central Asia and Transcaucasia: the evidence from Kyrgyzstan

PurposeOver the past decades, Islamic finance has expanded its presence to many countries including Muslim-majority post-Soviet Central Asian and Transcaucasian region. Undoubtedly, this expansion has aroused keen interest among the representatives of a range of areas such as science, politics and business. The purpose of this paper is to describe the scope, the key players and the main investment strategies of the Islamic finance market based on the evidence obtained from Kyrgyzstan.Design/methodology/approachThe main empirical corpus was formed from Bureau van Dijk’s databases (Zephyr and Orbis) and includes approximately 80 deals involving Shariah-compliant investments in Kyrgyzstan from 1991 to 2020. The initial corpus was then significantly expanded by means of content analysis of open media sources. Being still insufficient for deeper generalization, these data were further complemented by the analysis of an array of corporate information (press releases, presentations and financial reports) related to the identified deals. To ensure the credibility of the conclusions to be made on the nature of Islamic finance in Kyrgyzstan, the desk analysis was also complemented with field research using qualitative method of in-depth expert interviews.FindingsThis paper has shown that despite the yet modest market volumes represented by Islamic bank, Islamic windows, Islamic leasing company and microfinance companies, Islamic finance in Kyrgyz Republic has further growth prospects, which are associated with the arrival of large foreign Islamic banks that bring innovative financial products, the issuance of Islamic securities (sukuk) and launch of Islamic insurance (takaful). Being more open and consistent in the development of Islamic finance industry, the authorities of Kyrgyzstan understand the need for the initial development of the market by their own forces.Originality/valueThis paper is original and up-to-date, as it contains new and significant information. Suggesting a new approach to studying Islamic finance in post-Soviet area, this paper identifies the most active Islamic investors in Kyrgyzstan, classifies them, reveals their investment strategies and assesses the financial performance of Islamic investors as well as the total volume of Shariah-compliant capital in Kyrgyzstan. The findings of this paper can contribute to shaping policies toward Islamic finance in the post-Soviet region and, therefore, may be beneficial to the development of Islamic finance industry.

Rural Financial Decision Support System Based on Database and Genetic Algorithm

With the development of society and economy, the rural financial institution system mainly includes cooperatives and political and commercial rural financial institutions, and they are supplemented by agricultural insurance, guarantee, securities and other nonfinancial organizations to improve their own functions. Rural credit cooperatives have higher investment and operation risks than other financial institutions. New-type rural financial institutions are more sensitive to the market environment, asset quality and profitability, and risk-taking ability. Internal and external risks continue to accumulate, and their potential is low. These risks pose serious obstacles to the development and growth of financial institutions such as rural banks and microfinance companies, and pose major challenges to the security and stability of rural areas and agriculture. Using database and genetic algorithm to study rural credit risk, profitability, and liquidity, in order to track the impact of each explanatory variable in the system on the explained variable, the impulse response function is used to analyze the impact of nonperforming loan ratio on asset profitability. The data are all close to 0, indicating that the influence between the two is more obvious. The intelligent decision-making system support system evaluates the market risk, credit risk, liquidity risk, and risk management and risk acceptance of rural financial institutions and explores effective countermeasures for their sustainable development.

A Study on the Performance Evaluation System of Microfinance Companies Under Dual Objectives

Microfinance companies are the result of China’s rural financial reform. Since their creation, they have been undertaking the responsibility of effectively allocating financial resources and guiding the flow of funds to rural areas and underdeveloped areas through the introduction of private capital. The emergence of microfinance companies has intensified the competition in rural financial market and built a new pattern of rural financial service systems. As a result driven by multiple objectives, these microfinance companies must face the issue of how to integrate microfinance services for the “three rurals” (rural economy, rural community, and rural residents) as well as small, medium, and micro enterprises with their own finances in a sustainable and effective manner. On the basis of dual objectives and with full consideration of the characteristics of China’s microfinance companies, this study has constructed a performance evaluation system exclusively for commercial microfinance companies in China by drawing on the performance evaluation system of foreign micro-credit institutions through analytic hierarchy process and Delphi method.

ՀՀ-ում գործող ՄՖԿ-ների կողմից տեղեկատվական տեխնոլոգիաների կիրառելիությունը և զարգացման հնարավոր ուղղությունները/Applicability and Possible Development Directions of Information Technologies for MFCs Operating in RA

Nowadays, attracting clients in remote regions, high transaction fees for serving such clients, effective exchange of information on institutional level and effective management of the organization are some crucial problems that arise for microfinance companies (hereinafter referred to as MFCs). Information technologies are considered to be one of the best solutions to such problems. Within the framework of the paper local financial market and international analyses were made with the aim of introducing the possibility of submitting micro-borrowings with the help of technologies. Within the framework of the work, a secondary data analysis of developing, as well as developed countries was conducted. In addition a survey was carried out to clarify the possibility of providing credit services through the technologies for the population of the Republic of Armenia. As a result, it was established that middleaged clients, living in rural and urban settlements can be offered online loans through mobile applications. Provision of financial services together with payment and settlement organizations is also considered as a solution for microfinance organizations.

To regulate or not? Microfinance growth and collapse in Ghana

Regulating microfinance is an art of balance between protecting depositors and enabling financial inclusion. Experimentation with microfinance in the late 20th century fostered innovative approaches to financial inclusion of low-income populations around the world. Ghana was a pioneer in regulations that enabled microfinance in some types of licensed institutions, while tolerating other forms. In the early 21st century, for-profit microfinance took off in ways not intended by early promoters. This review paper analyses the consequences of waiting too long to rein in proliferating profit-oriented microfinance companies and failing to build capacity for regulation, resulting in lost deposits, public mistrust, and a painful delicensing exercise. It also draws on some recent empirical research to indicate implications for public perception and key success factors, leading to a recommendation that regulation be accompanied by measures to build capacity for successful transformation and supervision of microfinance institutions for both financial inclusion and sustainability.

The classification and the overview of business models of Islamic banks and Islamic financial companies

Subject. This article discusses business models of Islamic banks and Islamic financial companies, their particular characteristics and risks. Objectives. The study is intended to classify Islamic banks and Islamic financial companies by their business models, and identify the risks related to these models. Methods. I conducted a desk analysis of published studies, which contains facts, figures and trends of recent changes in the Islamic financial industry. I used general scientific methods for classification and groupings, logical analysis and theoretical generalization. Results. I classified Islamic banks and Islamic financial companies by qualities of their business models, and identified specific risks related to these models. Conclusions and Relevance. I identified key risks for each of, and created a map of risks for all ten types of business models that indicate a key risk, estimated probability and risk management measures. The proposed map of risks is intended to be a supportive tool in setting up the further strategy for adapting Islamic finance throughout the Post-Soviet area. The study contributes to proceedings on issues and prospects of Islamic finance in the CIS countries. The analytical materials can be used by ministries and agents, top executives of banks and development institutions, investment, microfinance, lease, insurance and advisory companies, financial industrial groups that seek to raise or place capital in compliance with Islamic financial principles.

The Impact of COVID-19 Lockdown in Banks and Financial Institutions' Stock Performance: Evidence from Nepal

This paper examines the impact of COVID-19 lockdown on daily stock returns of banks and financial institutions (BFI) in Nepal. Employing the panel data regression models, this study examines the effect of daily COVID-19 positive cases to the stock returns – during pre-lockdown, lockdown, and after-lockdown period – of 74 listed firms in Nepal from 2 May 2019 to 25 April 2021. The empirical results confirm that there was no significant impact of daily increased number of COVID-19 positive cases to the stock returns of BFIs in Nepal throughout the entire study period. Furthermore, this study inquires the influence of pandemic period to the individual class of the BFIs sector in NEPSE[1]. It discloses that the commercial banks, development banks and microfinance companies’ stock returns were adversely impacted during the pre-lockdown and lockdown period. However, after-lockdown period had significantly rebounded the overall BFIs stock returns in Nepal with the highest returns earned by microfinance companies and lowest return by commercial banks. [1] Nepal Stock Exchange Limited

Everyday experiences of digital financial inclusion in India's ‘micro-entrepreneur’ paratransit services

Self-employed labour in transportation is a notoriously precarious form of employment that occurs throughout many developing countries. In order to offset high-cost and insecure vehicle procurement arrangements, paratransit fare structures are formulated on the basis of a set of logics designed to maximise revenues. Although entrepreneurial, when these logics occur in conflict with public fare legislation, they are undertaken illegally, or informally, and are perceived as undesirable by policy makers and transport users. However, the underlying structures that necessitate these practices are seldom examined despite their significant effect on mobilities and the livelihood experiences of male entrepreneurs. This paper engages with critical literatures on the financialisation of poverty reduction to present financialisation as a class-based mechanism that, with the rapid increase of digital payment and ‘alternative’ credit scoring, structures micro-entrepreneurship and precarity in the neoliberal context of India. The paper argues that digitally enhanced financial inclusion techniques may steer low-income workers toward mainstream finance institutions modelled on the global economy. They enable profit to be generated by investors and private microfinance companies. However, new financial technologies do not do little to reduce the risk and expense of microfinance, nor do they increase micro-entrepreneurs' profit margins. Moreover, they threaten the informal practices entrepreneurs use to self-manage their financial precarity.

Effect of demonetization on microfinance industry in India

High-value denomination currency was scrapped off from the Indian economy on 8th November 2016, Rs. 500 and Rs. 1,000 currency notes were declared invalid at midnight hour. Taking such a bold step by Hon. Prime Minister of India Mr. Narendra Modi, means declaring 86% of cash in circulation an illegal tender overnight. This study is conducted on the immediate effect of demonetization on the microfinance industry in India and its after-effects in the later years. We have analyzed the data collected from the rural sector, on the collections and lending, impact on the farmers, how it has affected the small microfinance companies. We have also analyzed RBI’s initiative towards financial inclusion, Pradhan Mantri Jan Dhan Yojana (PMJDY), the emergence of new Small Finance Banks, Digital Banks, Payment banks, etc. We have critically analyzed the impact of cost versus the benefit from the demonetization exercise for the rural and microfinance industry. The aim of this study is to analyze the overall financial inclusion of the rural and small sectors towards the dream of a Cashless Economy.

Financial Sector during the Coronavirus Outbreak: Evidence from An Emerging Market

This paper examines the impact of COVID-19 lockdown on daily stock returns of banks and financial institutions (BFI) in Vietnam. Employing the panel data regression models, this study examines the effect of daily COVID-19 positive cases to the stock returns – during pre-lockdown, lockdown, and after- lockdown period – of 74 listed firms in Vietnam from 2 May 2019 to 25 April 2021. The empirical results confirm that there was no significant impact of daily increased number of COVID-19 positive cases to the stock returns of BFIs in Vietnam throughout the entire study period. Furthermore, this study inquires the influence of pandemic period to the individual class of the BFIs sector in HOSE. It discloses that the commercial banks, development banks and microfinance companies’ stock returns were adversely impacted during the pre- lockdown and lockdown period. However, after-lockdown period had significantly rebounded the overall BFIs stock returns in Vietnam with the highest returns earned by microfinance companies and lowest return by commercial banks.

Nonlinear Impact of Perception of Organizational Politics on Satisfaction with Co-workers and Job Stress

Large number of previous studies have tested that perception of organizational politics negatively impact on employee outcomes with linear relationship. To ascertain the condition where perception of organizational politics can be fruitful for employee outcomes, this study measured the nonlinear relationship of perception of organizational politics with satisfaction with co-workers and job stress. 453 employees working with microfinance companies in Kathmandu valley were surveyed to get cross sectional perceptual data. To infer the conclusion, data were analyzed adopting quantitative analysis, deductive reasoning approach as well as positivist research philosophy. Empirical evidences revealed the nonlinear impact of perception of organizational politics on satisfaction with co-workers and job stress. Both high and low levels of perceived organizational politics were harmful for satisfaction with co-workers and job stress. But a medium level of perception of organizational politics was fruitful for satisfaction with co-workers and job stress. The relationship between perception of organizational politics and satisfaction with co-workers was inverted U-shaped and the relationship between perception of organizational politics and job stress was U-shaped. Based on the findings, numbers of practical as well as theoretical implications are suggested.

Selling debt: Interrogating the moral claims of the financial elites in Central Asia

This article critically examines how banks and microfinance companies morally construed and evaluated their lending practices and income in Kazakhstan and Kyrgyzstan. Banks occupy a powerful position in a monetary economy, because they do not merely create money ‘out of thin air’, but can charge for it, that is, interest. In doing so, they obtain unearned income and extract wealth. The article examines how banks and microfinance companies used myths, ideals, discourses, norms and emotions to justify and de-politicise their unequal power, unearned income and damaging effects. The study draws on the moral economy perspective and the post-Keynesian theory of money to understand financial institutions’ moral justifications and rationalisations of their position and power. This article contributes to a wider literature on neoliberalism and morality in post-socialist economies.

Efficient Market Hypotheses of Nepalese Stock Market

The purpose of this paper is to examine the random walk hypothesis (RWH) by testing the weak-form efficiency in the Nepalese capital market. Descriptive, correlation and causal comparative research design has been used for analyzing the variables and different phenomenon. This research has been prepared only with the help of secondary data. Closing price of company has been collected and analyzed for the period 2015/16-2019/20. Thus researcher tried to analyze the market efficiency with the help of five years data (daily closing price).There are altogether around 233 companies listed in NEPSE. So to make this research feasible and simple researcher has selected only 10 companies from the NEPSE by using purposive sampling technique. In course of selecting company researcher has tried to incorporate only financial sectors as commercial banks, finance companies, insurance, and microfinance companies but development bank has not been taken as sample due to same nature of commercial bank. Researcher examined the weak form efficiency of the Nepal stock exchange (NEPSE) using auto correlation test (parametric test) and run test (non-parametric test) for the period of 2015/16-2019/20. Mainly this research work tested the efficient market hypothesis of Nepalese stock market with the help of daily closing price of 10 Sample Company of different sectors. The market is inefficient in the weak form implies that the NEPSE does not follow a random walk. This means that the NEPSE provides an opportunity for out- performance by skillful managers and investment specialists. Auto correlation exists in price of stock evident that there is high level of dependency of price of stock with the previous ones. It will be easy for speculator and trader to exploit the market and gain handsome profit from the market. All investor are not assumed to be rational in inefficient market, most of the people say investor are investing on the basis of market rumor. Market may be inefficient due the asymmetric of information and insider trading.

Assessing the Impact of Operational Flaws on the Performance of Microfinance Institutions in Ghana

Microfinance institutions contribute significantly to the development of a country, and many of these institutions are found in most developing countries including Ghana. However, many challenges have been alleged to stifle the efforts of microfinance companies in their attempt to make their all-important contribution to the development of nations. This study explored the effect of operational flaws on the performance of microfinance institutions in Ghana. The results discovered flaws and challenges associated with the operations of the MFIs in many areas including corporate governance, credit risk management, credit administration, regulatory challenges, and training programs. The study also revealed that such flaws and challenges do harm the overall performance of the MFIs. Based on the findings, it is recommended that MFIs put in place a well-composed and resourceful credit committee to perform the duty of credit risk management in the institutions. The institutions could also reduce their interest rates to encourage their clients to apply for more loans. Lastly, it is recommended that the MFIs take all necessary steps to ensure that they reduce the flaws and challenges they face to mitigate the negative impact of such deficiencies on their performance.

RETRACTED ARTICLE: Risk analysis method of bank microfinance based on multiple genetic artificial neural networks

As a supplement to the financing of small- and medium-sized enterprises, bank microfinance companies are nonbank financial institutions, and it has played an active role in maintaining the stability of financial markets. However, in the course of the operation of microfinance companies, due to the lack of careful management and risk control, the problem of risk management has become increasingly prominent. The purpose of this paper is to study the microfinance risk based on polygenic artificial neural network, and it provides theory and practice application for risk management of microcredit enterprises. Taking the risk management of China’s microfinance companies as the research object, on the basis of previous studies, this paper analyzes the risks of bank microfinance companies. Secondly, the basic theory of neural network model and its transformation function are introduced, and the learning method of neural network. At the same time, the learning algorithm of neural network and its improved algorithm are mainly introduced. It lays a theoretical foundation for the follow-up empirical research. Then, through the empirical study of data-based risk assessment of microcredit of farmers, the sample data are divided into training samples and test samples for comparison. Then, we use MATLAB software to establish a neural network model for farmers’ microcredit risk assessment. Finally, in order to make the neural network model of farmers’ credit risk assessment better popularize and apply, and effectively reduce the credit risk of farmers’ microcredit. The corresponding policy suggestions are put forward, which proves the validity and applicability of the neural network in the field of farmers’ microcredit risk assessment. It provides a good basis for rural credit cooperatives to identify the credit risk of farmers.

Research of the Current Situation and Future Trend of Internet Small-Credit Companies in China—Take Chongqing as A Case Study

In recent years, Internet finance has developed rapidly in China, benefiting from China's political, economic, social and technological environment. Taking Chongqing as an example, this paper analyses the current situation and the reasons behind the development of Chongqing Internet Microfinance Company, combining with the existing literature at home and abroad, as well as many excellent and enterprise cases such as Alibaba, Suning, Xiaomi, Jingdong, Baidu and so on. At the same time, it puts forward some thoughts on the future development of Internet microfinance companies.

Internal Financial Risk Management In Microfinance Companies: A Case Study Of Akuapem Rural Bank, Ghana

The operations of Microfinance Institutions (MFIs) in Ghana have recently come under serious public scrutiny. This position was fairly caused by Bank of Ghana’s (BOG’s) announcement regarding 70 microfinance companies whose provisional licenses were revoked BOG (2016). This led to the closure of DKM Diamond Microfinance and some other microfinance companies in the country. This worsening circumstance surrounding the microfinance industry calls for the need to provide practical knowledge on the use of financial analysis tools to manage internal financial risks of the microfinance industry. Data from Akuapem Rural Bank (AKRB) financial statements for the period of 2008 to 2015 (refer to appendix) was analysed using regression analysis, descriptive statistics, trend analysis and ratios. It was observed that the profitability of AKRB is greatly influenced by credit risks, bank size, interest income growth and debt-ratio. The study also revealed that AKRB had comprehensive and adequate risk management structures in place in managing its credit and other operational risks.

CITIZEN’S SAVINGS AS A TOOL FOR THE SYSTEMIC DEVELOPMENT OF THE ECONOMY

The article examines investment tools available for use by a wide range of citizens. The purpose of this paper is finding investment instruments that can perform the function of the systemic economic development. It is suggested that such tools should have the following characteristics: Are available for investment to the average citizen Ensuring a positive return after adjustments for inflation and deducting costs The funds raised with the help of such an instrument are directed to the development of the economy. The latter feature is particularly relevant since Russia’s share in the global economy is declining as the result of slowing GDP growth. In our work, we used the following research methods: study, measurement, comparison and generalization. Thus, as a result of the study of investment instruments, we identified the advantages and disadvantages of each investment instrument. For the retrospective period, we estimated the returns, which should receive investors after adjustments to the level of inflation and costs. Further, we compared the characteristics of individual investment instruments and estimated their potential as instruments capable performing the function of systemic development of the economy. As investment tools available for use by the average citizen, there was investigated: currency, precious metals, real estate, bank deposits, deposits in micro-finance companies, securities (Federal loan bonds, corporate bonds, stocks), mutual funds, individual investment accounts opened with the professional trustee, investment life insurance. As a result, we draw conclusions concerning the potential of each instrument as a tool for the systemic development of the economy, as well as giving recommendations on the use of investment instruments, depending on the preferences of investors.

PROTOCOL: Impact of financial inclusion in low- and middle-income countries: a systematic review of reviews.

PROTOCOL: Impact of financial inclusion in low- and middle-income countries: a systematic review of reviews.

Religiosity, Job Status and Whistle-Blowing: Evidence from Micro-Finance Companies

<p>We investigate the effect of religiosity and job status on whistle-blowing among employees of micro finance companies in Ga-East district of Ghana. The intellectual dimension of religiosity informs and produces high sense of morality in an individual thus influencing whistle-blowing. Additionally, religion create the platform for building belief in certain rules and regulations as right or as wrong. Using quantitative approach for analyzing the effect between independent variables (job status and religiosity) on the dependent variable (whistle-blowing), we show that though religiosity and job status can influence whistle-blowing, however in this study, the magnitude is negligible and perhaps other variables in concert with religiosity and job status may influence whistle-blowing activities in an organization. We conclude that that whistleblowing generally in the Ghanaian setting is yet to receive high prominence due to the general belief of lack of protection for persons who come out to expose wrongdoings and the general fear of harassment, victimization and loss of job by the whistle-blower.</p>