Microfinance Interventions Research Articles

Effects of Microfinance Intervention on Multiple and Non-multiple Financing Clients: A Case of Gandaki Province of Nepal

The objective of this study is to examine the effects of microfinance intervention on multiple and non-multiple borrowings clients in the Gandaki province of Nepal. Further, the study aims to explore the reasons for multiple borrowings and the impact of microfinance intervention on micro-enterprise creation, total investment, profit per month, income, and saving. The research is based on primary sources of data and confined to Muktinath Biikas Bank Limited (MBBL). Microfinance clients involving MBBL for the last five or more years are the respondents, and 311 MF clients were randomly selected from 10 branches of MBBL. Both descriptive and inferential statistics have been applied to find out the effects of microfinance intervention. The key reasons behind multiple financing are forced by friends, the presence of other MFIs, insufficient loan, meeting domestic requirements, repaying other MFIs loan, lending to others at high interest, and repaying a high-interest loan. There are significant differences between multiple and non-multiple financing clients in terms of micro-enterprise creation, total investment, profit per month, and saving. The result shows that non-multiple financing clients are more likely to earn more profit, create new business, and have the potential for large-scale investment. The mean score shows that non-multiple financing clients are saving more than multiple financing clients, indicating more commitment to saving for future funds requirement to expand the business. At last, the study concluded that the performance of non-multiple financing clients is significantly better than multiple financing clients. Since multiple financing creates problems if it is not controlled properly, so microfinance institutions (MFIs) and regulatory authorities should discourage multiple borrowing practices through proper regulation, adequate supply of loans, and its productive orientation.

Microfinance Can Raise Incomes: Evidence from a Randomized Control Trial in China

This study evaluates the impact of a randomized control trial (RCT) in China that introduced externally funded village credit funds in poor, rural villages. In contrast to recent RCT-based studies that have failed to find evidence of significant increases in income from microfinance interventions, we find that the Chinese program significantly raises household income and reduces poverty. We explore possible explanations as to why the estimated impacts may be greater in China: lump-sum repayments, lower interest rates, less access to formal credit before the program, and greater potential returns from off-farm employment opportunities that are credit-constrained.

The Macroeconomics of Microfinance

Abstract What is the aggregate and distributional impact of microfinance? To answer this question, we develop a quantitative macroeconomic framework of entrepreneurship and financial frictions in which microfinance is modelled as guaranteed small-size loans. We discipline and validate our model using recent empirical evaluations of small-scale microfinance programs. We find that the long-run general equilibrium impact is substantially different from the short-run effect. In the short-run partial equilibrium, output and capital increase with microfinance but total factor productivity (TFP) falls. In the long run, when general equilibrium effects are considered, as should be for economy-wide microfinance interventions, scaling up microfinance has only a small impact on per-capita income, because an increase in TFP is offset by lower capital accumulation. However, the vast majority of the population benefits from microfinance directly and indirectly. The welfare gains are larger for the poor and the marginal entrepreneurs, although higher interest rates in general equilibrium tilt the gains toward the rich.

Impact of Microfinance Intervention on Rural Poverty Alleviation in Nigeria: An Application of Difference in Differences Technique

In this study, Difference-in-Differences methodology was used to assess the impact of microfinance loan on rural poor in Nigeria. The sample is classified into four groups: the microfinance loan beneficiaries (treatment group) before obtaining the loan and after the programme implementation. Likewise the non-beneficiaries (control group that were also qualified but could not get the loan) were considered before their application for the loan and after the programme was implemented. The result revealed that microfinance loan has favourable contributions to poverty alleviation in the study area. However, there is still need for government aid in order to make the poor people benefit more from the microfinance programme and enhance economic development. Government should support the MFIs with funds that would be disbursed at concessionary interest rates. In addition, provision of more physical, social and economic facilities would encourage the establishment of more MFIs in the rural areas . Keywords: economic development, poverty, microfinance, difference in differences, Nigeria DOI: 10.7176/JESD/11-16-06 Publication date: August 31 st 2020

Microfinance and Peer Health Leadership Intervention Implementation for Men in Dar es Salaam, Tanzania: A Qualitative Assessment of Perceived Economic and Health Outcomes.

Men in sub-Saharan Africa continue to experience health disparities that are exacerbated by low employment. This study qualitatively assessed men’s perceptions of the economic and health-care-seeking effects of participation in an integrated microfinance and peer health leadership intervention on violence and HIV risk reduction in Tanzania. Three focus group discussions with 27 men, aged 20 to 44 years, examined the perceived effects on income generation, employability, mental health, and uptake of HIV and related health services. All discussions were recorded, transcribed, and analyzed using deductive and inductive coding methods. Men reported that the benefits of the intervention included increased employability and income-earning activities due to greater access to entrepreneurial training, low-interest microfinancing, and male-oriented group supports to start or strengthen their businesses. Increased wages through business or other forms of employment were also attributed to men’s lower anxiety and distress as financial providers for their families. However, men indicated that apart from the uptake of free HIV testing services, there was limited change in overall health-care-seeking behavior given the high clinic fees and lost time to earn income when attending routine health visits. Men recommended that future microfinance and health promotion interventions provide larger loan amounts, less frequent repayment intervals, and access to health and social insurance. Microfinance and peer health leadership interventions may help to address economic and health disparities in poor, urban men. Efforts are needed to assist lower income men in accessing financial tools as well as fee-based preventive and health-care services.

EMPOWERMENT INEQUITY OF MICROFINANCE INTERVENTION: ROLE OF COMMUNICATION IN COMMUNITY PARTICIPATION

It is assumed that microfinance through self-help groups is an accelerator of development and change. A self-help group is a voluntary association of 10 to 20 women from the disadvantaged section of the population who come together to save and avail credit from microfinance institutions and banks through a facilitating agency such as NGO. This paper reviews the scope and limitations of self-help groups in having an impact on the economic and social upliftment of its members by focussing on empirical research conducted in the state of Jharkhand and review of existing literature. Majority of the available literature focuses on the economic empowerment of women through microfinance intervention with a minuscule focus on social empowerment through identified social empowerment variables. This study points out that economic empowerment has not translated into desired social empowerment for the beneficiaries of this program. The social empowerment of the marginalized is still a mirage. This paper investigates the reason for the same and the role of communication in gender sensitization and stakeholder participation as communication is a facilitator of social change. It aims towards understanding the linkage of community participation and communication for empowerment and propose suggestions for the same.

Age Moderates the Association Between Microfinance Membership and Physical Abuse, Relationship Power, and Transactional Sex in Haitian Women.

Microfinance interventions may have differential effects on relationship dynamics among subpopulations of women. We estimated the association between microfinance participation duration and physical abuse, relationship power, and transactional sex in a sample of Haitian women (n = 304). Furthermore, we tested for moderation by age. In older women, microfinance tended to be associated with reduced risk of violence, low relationship power, and transactional sex. These associations were not observed for younger women. Thus, older Haitian women may benefit from microfinance in ways that younger women do not. Future studies should examine whether additional training and resources could improve outcomes in younger women.

Measuring the Impact of Microfinance on Economic Enhancement of Women: Analysis with Special Reference to India

Enhancing economic opportunities among the self-help groups (SHG), women through micro-credit is considered to be a major resource. The aspiration is to build resilient livelihoods through SHGs for graduating into small enterprises through efficient microfinance outreach. It is the dream objective with the efficient SHG–bank linkages to be acheived. Previously, SHGs were focused only on saving skills, but now the emphasis is to enhance economic opportunities through exposure to income-generating activities and build confidence to earn and handle money. In India, few states with a higher level of microfinance outreach are the states with relatively high levels of economic enhancement. In this facet, the methodological aspects of the journey of microfinance towards unleashing the power of women in India is systematically analysed, and the state-wise analysis of women’s economic enhancement performance is examined. In the light of empirical evidence, a wide variation in the outreach of microfinance intervention to the poor women is observed across the regions of the country. Women’s empowerment is seen as the progressive index for development. Across India, only 11 states have women empowerment index more than 1, while the remaining states score lower than 1. The strategy is to train and promote talented women to establish micro-enterprises for earning recurring income. For understanding the status of women across the country the mean analysis between the regions was done using two variables. The results confirm that the southern and eastern regions lead in dispersion (MD1) of funds, whereas microfinance access (MD2) is dominant in southern and central regions, indicating relatively high levels of economic enhancement. It is, thus, assumed that microfinance in true spirit can be a useful tool for achieving vibrant growth by narrowing the non-performing assets (NPAs) of the SHGs and channelizing the resources into micro-level planning and training for self-sustenance.

Community-based savings groups, women’s agency, and maternal health service utilisation: Evidence from Mozambique

ABSTRACT This study, using data collected as part of an ongoing programme evaluation, investigates whether participation in Saving Groups (SGs)—a community-owned microfinance intervention focused on poor households – is associated with maternal health service utilisation, and whether this association is mediated by women’s agency – as measured by self-efficacy and decision-making autonomy. We compared maternal health service utilisation among SG members (n=105) and non-members (n=100) in rural Mozambique. We estimated prevalence ratios for SG membership and women’s agency using Poisson regression while controlling for confounding factors. We also estimated mediation effects for women's agency. The results showed that SG membership is associated with four or more antenatal care (ANC) visits, skilled birth attendant (SBA) use, and postnatal care within 48 h of delivery. Self-efficacy mediated the relationship between SG membership and ANC vists and SBAuse, but not postnatal care; whereas women’s decision-making autonomy mediated the relationship with SBA use and postnatal care, but not ANC visits. This study suggests that the impact of SG membership on use of maternal health services goes beyond improvements in household income and may operate through women’s agency by giving women the ability to realize their preference for quality health care.

Social inequality and access to social capital in microfinance interventions

PurposeThe purpose of this paper is to empirically examine the inequality perpetuated through social categories in accessing the social capital generated through the microfinance interventions in India as the country has pronounced economic inequality by social categories like many developing stratified societies.Design/methodology/approachThe study uses survey data collected from 75 villages in rural India and tests whether the formation and maximization of social capital through self-help groups (SHGs) is dominated by social categories, e.g. high-caste groups, males and superior occupation classes. Using logistic regression framework, the study assesses the formation and maximization of social capital through multiple SHG membership.FindingsThe paper finds that the microfinance approach of empowering weaker sections is considerably limited in its success, in the sense that it provides them with the opportunity to the credit access and support through SHGs. But, the empirical model further indicates that social capital in form of these SHGs may fall prey to the dominant social categories, and thus, these institutions may potentially enhance inequality.Research limitations/implicationsThe paper is derived from the secondary data set, so it is unable to comment field reality qualitatively.Practical implicationsMicrofinance policy makers will have an improved understanding of inherent social inequalities while implementing group-based programs in socially stratified societies.Originality/valueSocial capital, if treated as an outcome accumulated in form of groups, provides with an important framework to assess the unequal access through the microfinance interventions. Overlooking the inherent unequal access will deceive the purpose of social justice in the group-based interventions. The microfinance and other welfare policies engaged in group formation and generating the social capital need to be more sensitive to the disadvantageous sections while focusing on multiple group access by disadvantaged social groups.

Informal Sources of Microfinance and Profitability of Micro and Small Enterprises Clusters in South-East Nigeria

Micro and small enterprises (MSEs) have been found to be engines of growth, drivers of production, income generation, job creation, and tools for poverty reduction. The source of microfinance is important because at the center of every enterprise objective is profitability. MSEs in South-East Nigeria have not played these important roles effectively due to the challenges of access to finance and a host of other factors. The main thrust of this article is to evaluate the effectiveness of informal microfinance sources on the profitability of MSEs in Southeast Nigeria. The study employed a multistage sampling technique in cluster selection from three industrial cities and generated relevant data through questionnaires. A sample of 540 enterprises out of 1994 enterprises was selected across different clusters comprising enterprises under production, trade, and services in the three cities. Employing a regression technique, the study found that informal microfinance sources have impact on the profitability of MSEs. The study further found that enterprises patronized the informal source because of quick responses and personal relationship (social capital). The study recommends that microfinance policy framework and interventions should encourage official microfinance providers to have their location closer to the enterprise clusters with the appropriate regulatory guarantee for operators.

THE ROLE OF DEMOGRAPHIC VARIABLES IN SOCIAL UPLIFTMENT OF WOMEN THROUGH MICROFINANCE INTERVENTION

Ponte Academic JournalApr 2020, Volume 76, Issue 4 THE ROLE OF DEMOGRAPHIC VARIABLES IN SOCIAL UPLIFTMENT OF WOMEN THROUGH MICROFINANCE INTERVENTIONAuthor(s): Shreya Patel ,Amar Nath JhaJ. Ponte - Apr 2020 - Volume 76 - Issue 4 doi: 10.21506/j.ponte.2020.4.8 Abstract:Social empowerment is one of the powerful indicators of human development. There have been many studies focusing on the economic impact of microfinance intervention on its beneficiaries. Measuring economic impacts are easier as these are quantitative in nature. However, to gauge the full potential of this program the social impact needs to be researched in depth. Through this study, the researchers have tried to investigate five social impact variables of microfinance namely – Decision Making, Health, Empowerment, Social Communication and Crisis Management. The research also aims to study the impact and relation of independent demographic variables on the social variables identified. Data has been collected from 270 SHG members through a structured questionnaire. Statistical techniques like Correlation, Chi- square test, KMO and Barlett’s Test, Cronbach Alpha, ANNOVA and Scheffe’s Test has been used for the analysis of data collected. It has been observed that there is significant effect of demographic factors on the social impact variables. Positive correlation is noted among the social variables identified. The paper concludes that microfinance has positive social impacts on its members and their communities. The demographic variables such as age, education level and source of loan have a positive correlation on social impact variables and hence such factors need to be given due attention while formulating any development program. Download full text:Check if you have access through your login credentials or your institution Username Password

Randomization for women’s economic empowerment? Lessons and limitations of randomized experiments

Abstract Worldwide, policy-makers and academics alike are searching for ways to enhance women’s economic empowerment. One important route to economic empowerment – paid employment – still shows wide gender disparities. We discuss some lessons from randomized evaluations of microfinance, business training, and other interventions aimed at increasing women’s employment and earnings. We then point at important barriers related to women’s responsibility for childcare and domestic duties as well as other social norms. To improve policies for gender equality, we need to understand how norms affect women’s labor market entry and trajectories, what works to mitigate their impact, and how they can change. We argue that RCTs can help us find answers, but that we also need to keep studying macroeconomic changes, non-randomized development and gender policy interventions, and large-scale micro-level panel data capturing employment dynamics.

Impact of Microfinance on Rural Household Poverty in Ethiopia: A Review

Poverty is highly affecting the life’s of the population of Less Developed Countries (LDCs) in general and that of rural people in particular. High vulnerability, lack of education and medical services, less participation in different decision-making activities are some of the major problems the rural people faced. To overcome these and other related socio-economic problems, micro finance Institutions (MFIs) targeted the poor in general and the rural people in particular. The main objective of this review is to find out whether the provision of microfinance services has brought changes on the living standards of clients. It is expected that microfinance services create employment opportunities, increasing income, enhancing empowerment and in aggregate improve the livelihood of the poor. Even though the performance of microfinance increase from time to time there are many problems facing microfinance institutions in Ethiopia. These includes inaccessibility for a foreign capital which may foster their loan portfolio, failure to repay loan at all or partly or not paying on time which causes serious problems on sustainability of the institutions, lack of research to understand client needs and lack of follow up of the clients. Reviewing the impact of microfinance intervention is important to know its viability on poverty reduction. The impact assessment of microfinance is conducted both at household and institutional outreach and sustainability. The impact of the program is assessed at household level based on average income, which in turn affects access to education, access to medical facilities, nutritional status, savings, employment generation and empowerment, among others, which are indicators of poverty. If outreach has been expanded and institution is sustainable, then the program is judged to have a positive impact as it has widened the financial market. Loan repayment performance is affected by a number of socioeconomic, institutional and natural factors, some of which are believed to impact on repayment negatively while others have positive impact. Major socioeconomic variables that affect credit repayment include education, age of household head, family size, gender of household head, farm size, loan size, livestock ownership, annual farm revenue, loan diversion, frequency of contact with development agent, group effect and location of borrowers from lending institution. Keywords: Loan, Client, Impact, Poverty DOI : 10.7176/JESD/10-23-08 Publication date: December 31 st 2019

English

Microfinance is proposed to be an efficient and viable means to poverty alleviation in the developing world, but there has been little empirical study on the impacts of microfinance banks. This study examines the impact of Rima Microfinance Bank on beneficiaries’ income and poverty in Goronyo Local Government Area of Sokoto State, Nigeria. A multistage-sampling technique was used to draw the sample and a structured questionnaire was used for data collection. The data was analysed using descriptive statistics (means, frequency, and percentages) and Foster, Greer and Thorbecke (FGT) poverty index. The result revealed that the beneficiaries had a mean per capita income of N47,489.19 before and N115,678 after using the Rima Microfinance credit facility. The result of the FGT poverty incidence reduces by 6%. This is reflected by the reduction in poverty depth and severity significantly after the Rima microfinance intervention in the form of agricultural input credit facilities. The study recommends a microfinance policy that will ease more access to credit as well as ensuring efficient utilization of acquired inputs through effective monitoring for better productivity, income and poverty reduction among rural dwellers. Key words: Rima-Microfinace, impact, income, poverty, beneficiaries. &nbsp

An Assessment of Microfinance in Socio-economic and Psychological Empowerment of Women in Some Selected Western Zones of Oromia Region

As a matter of course, the position of women in Ethiopia has been low compared to men. Women are poorer, have low education and suffer from traditions and customary laws. This study explores the position of micro finances in socio-economic and psychological empowerment of women. The study is causal type of research to clearly depict the relation (correlation) between empowerment of women and microfinance institution. Since the study uses survey method the research approach is basically quantitative. Qualitative data have been used in support. Convenient sampling strategy were in work to select study sites as the research is proposed to be done in four selected zones of Western Oromia region. From the total population of 2559 female customers having relation with MFIs and engaged in various business activities in the western part of Oromia region, the researcher selected 334 persons as a sample respondent based on Simple random sampling technique on Proportional base. Primary data is the main source of data and the data were obtained by using questionnaire and interview. To analyze the data inferential statistics like t-test were applied to gain an insight about the change before and after the microfinance intervention in women’s life. Linear regression and correlation analysis are also made with the help of statistical package for social science (SPSS version 20). It is found that Women are economically, socially and psychologically empowered by participating or dealing with microfinance program. Focus on providing Skill trainings, consultancy and consciousness raising training which are supposed to be combined with the core function of a microfinance program of providing financial services let women’s give power to themselves or feel empowered . Keywords : Microfinance, economic, social and Psychological empowerment DOI : 10.7176/RJFA/10-17-01 Publication date :September 30 th 2019

Dynamics of Group Lending Mechanism and the Role of Group Leaders in Developing Countries

Group lending mechanisms have increasingly become popular among microfinance providers in recent years. This is largely due to its ability to leverage joint liability to increase loan repayments whilst promoting an entrepreneurial spirit among borrowers. Meanwhile, a group-lending mechanism is also very important in promoting women's empowerment through cooperative engagements of all group members. However, the effectiveness of the group lending methodology in the delivery of microfinance within a developing country context is largely under-researched. Using data from extensive focus groups interviews of women borrowers held in Nigeria among participants from 150 different groups, this article analyses the dynamics of group lending mechanism (group formation, peer monitoring, pressure and support). The article widens the current narrow literature on group leaders by providing a detailed empirical account of the activities of group leaders in a microfinance intervention. The findings showed that because group leaders are primarily held liable for loan delinquency of group members, they are more highly motivated than other members to monitor and pressure members. The results also suggest that while group leaders were found to perform vital roles, some of these group leaders abused their positions in ways that undermine group cohesion and microfinance sustainability. Lastly, the article introduces the “multiple card phenomenon” in group-based microfinance intervention.

Do farmer and credit specific characteristics matter in microfinance programmes’ participation? Evidence from smallholder farmers in Ada west and east districts

PurposeUsers of smallholder farmer microfinance are able to make enough returns to repay credits advanced to them. However, they are in dire need of financial capital such that they are inconsiderate of farmer- and credit-specific characteristics when participating in a microfinance programme. This study analyses perceptions of stakeholders regarding select farmer and credit characteristics within the microfinance industry. The study identifies and analyses the factors that influence participation in a microfinance programme by farmers using the logistic regression model. The purpose of this paper is to widen the knowledge base of rural agricultural finance, including factors that influence participation in microfinance intervention(s) thereof.Design/methodology/approachA total of 104 participants and 120 non-participant farmers in microfinance programmes were interviewed using a semi-structured questionnaire by applying the multistage sampling technique. The paper applied the logistic regression model in which farmer- and credit-specific characteristics were used to estimate the probabilities of participation.FindingsThe logistic regression results showed that distance, interest rate, experience, membership of farmer-based organisation, number of dependants, household, gender and age were statistically significant farmer- and credit-specific characteristics that influence participation in microfinance programmes. Interest rate and distance exact negative significance influence on participation, whereas membership of farmer-based organisations, experience, gender, household head and age influence participation positively. Reduction in the interest rate and expansion of microfinance to very remote areas rather than locations in urban areas are crucial in terms of improving participation.Research limitations/implicationsThe paper used data from only farmers so there is a limit to which the results can be generalised for all microfinance users. It may be relevant to undertake a study that considers non-farm enterprises.Practical implicationsThis paper brings to light the need to develop well-structured microfinance facilities that meet the specific needs of the rural poor in transitioning economies while taking into consideration critical factors affecting participation before the establishment of such programmes.Originality/valueThis paper provides empirical evidence to show that farmer- and credit-specific characteristics are essential to ensure participation and success of microfinance programmes thereof.

Performance of Multiple Borrowing Clients in Gandaki Province of Nepal

The multiple borrowing problems are more common in microfinance institutions in Nepal. The study aims to evaluate the performance of multiple borrowing clients in Gandaki province of Nepal with reference to Muktinath Bikas Bank Limited (MBBL). The performance of multiple borrowing clients, in terms of women empowerment, consumption expenditure, capital expenditure, micro-enterprises creation, saving, investment, and profit, has been examined with the help of descriptive and inferential statistics. The study has been confined to five districts of Gandaki province and the data have been collected from MBBL clients who are involved in microfinance intervention at least from the last five or more years. The performance of most of the observed clients was empowered by microfinance activities but no significant difference in terms of changes in the livelihood parameters. Although microfinance programmes empower clients, the results of the investment, saving, micro-enterprises creation, capital and consumption expenditure, and income generation of clients are not convincing. The regulatory authority should identify the problems of multiple borrowing whether the financing from microfinance institutions is just for their profit or for productive application of loan. The socio-economic performance of clients is connected with the effective monitoring of clients made by microfinance institutions whether the loan has been properly utilized or not.

Does socio-Demographic Variables Matter in Explaining Issues and Challenges in Islamic Microfinance? Evidence from Malaysia

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