Microfinance Management Research Articles

Is Microcredit and Health Insurance Access Effective for Vulnerable Peoples?

Using secondary data collected from Dschang in the West region of Cameroon, we examined the effectiveness of microcredit and health insurance access on vulnerable groups which includes the physically disabled and other forms of vulnerability. We undertook a statistical and qualitative econometric analysis using a logit model and obtained the following results: microcredit and health insurance access reduce the vulnerability of people via their health, financial and social status. Our findings open the way for some economic measures that should be taken to assist vulnerable people. From a macroeconomic perspective, these measures include the implementation of a food policy targeted towards increasing access to nutrition; a financial policy to improve access to drugs for individuals, and a social policy to achieve a high level of integration of vulnerable peoples and a high level of literacy of individuals. From a microeconomic perspective, we recommend that microfinance managers develop more products specific to and targeting the vulnerable population as well as those involved in small jobs and the informal sector with specific loans that can help them move to formal and more conventional jobs. To the best of our knowledge, this is the first paper with this objective and methodology focusing on the dataset along with the same case study.

Strengthening Sharia Microfinance Regulations And Business Models In Indonesia

This article aims to elaborate on the regulation and model of Islamic microfinance in Indonesia. A clear understanding of the types of microfinance and the business model run by Islamic microfinance is needed to answer the problems faced by this institution. Solid and stable Islamic microfinance institutions serve a critical role in increasing access to loans and business capital for the poor and micro-enterprises. So far, the poor have not been reached by formal financial institution programs. This study employs a normative juridical approach using primary and secondary legal documents. The study results show that the role of the sharia supervisory board and the Cooperatives and SMEs Office has not played an optimal role in ensuring the compliance of microfinance managers with sharia principles and values and prudent microfinance management. The presence of regulations and institutions that guarantee sharia microfinance deposits is needed to protect managed funds and increase public trust.

Loss given default or default status: Which is better to determine farmers’ credit ratings?

This paper establishes a novel farmers’ credit rating model and explores the difference in credit rating based on loss given default (LGD) and default status, using unique loan data from the CFPA Microfinance Management Co., Ltd in China. The empirical results show that the discrimination ability of the farmers’ credit rating method with LGD as the dependent variable is better than that with default status as the dependent variable. Furthermore, the theoretical analysis and empirical verification of this paper provide valuable supplements to the existing literature and new risk measurement insights for the risk management technicians of financial institutions.

Analytic Network Process and Tawhidi Strong Relationship in Managing Business of Sharia Commercial Bank

Islamic banking is a multiple microfinance management business concept. By determining solutions and examining their methods for present and future microfinance management, the Kema Logical Organization Cycle and Tawhidi String Relationship technique seeks to identify any problems or restrictions in existing financial conditions. Islamic banks employ techniques including Super Choice program support and Insightful Organization Interaction. The Analytic Network Process approach and Super Decision software support are used in this study. The purposive sampling approach will be used to pick a number of participants for this research, including practitioners, academics, specialists, and regulators.Based on the results of this research, BTPNS, the only bank that provides the finest services, focuses on the income earners of productive low-income groups and places a priority on the empowerment of women. BTPNS also creates training programs to help people develop skills, discipline, and hard work in order to boost the community's economy. Providing MSME training; The partnership between BRIS and BNIS provides benefits in infrastructure development and long-term financial management. Implementing the funds offered by Islamic banks has as its goal enhancing management and microfinance in order to develop an Islamic retail bank with such a business model that prioritizes welfare.

Microfinance Management of Indian Companies

History of microfinance can be traced back to the middle of 1800s when the theorist Lysander Spooner was writing of about benefits of small credits to entrepreneurs. It is the source of financial services to small scale business lacking access to banking and related services. Microfinance refers to a variety of financial services that target low-income clients particularly women since the clients of microfinance companies (MFCs) have lower incomes and often have limited access to other financial services, microfinance products tend to be for smaller monetary amount than traditional financial services. These services include loans, savings, insurance and remittance. Microfinance loans are given for variety of purposes frequently for microenterprise development. This also reflects in diversity of products and services offered. Because of varied needs and because of the industry’s focus on the poor, microfinance often use nontraditional methodologies such as group lending or other forms of collateral securities not employed by the formal financial sector.

MICROFINANCE MANAGEMENT MODEL: CASE OF COTE DIVOIRE

This article deals with the issue of client solvency in microfinance. Microfinance includes all financial products and services designed for a public excluded from traditional banking circuits. The development of these microfinances is a very important issue and makes it possible to reduce the unemployment rate. However, the lack of customer solvency makes the management of these microfinances complex. In this article, we propose a microfinance management technique based on the use of K-nearest neighbor (KNN) and smart contract algorithms. The proposed approach makes it possible to model the behavior of a customer to arrive at their solvency.

The future of data-driven relationship innovation in the microfinance industry

Data-driven innovation (DDI) initiatives by microfinance institutes have transformed the global poverty alleviation landscape. Despite the fact that relationship building is one of the primary goals of DDI initiatives in microfinance operations, there has been little research on the dimensions of relationship quality. This study examines how DDI initiatives recognize and incorporate relational dimensions in their service offerings to alleviate poverty. Drawing on a systematic literature review, thematic analysis and interviews with 20 microfinance managers, this research explores the relationship quality parameters that need to be leveraged. Grounded in the resource-based theory, the findings of this study confirm trust and commitment as two key relationship capabilities. The findings contribute to a better understanding of how microfinance institutes can use DDI to achieve sustainable competitive advantage.

Adoption of Islamic microfinance in Indonesia an empirical investigation: an extension of the theory of planned behaviour

The theoretical framework of the Theory of Planned Behaviour (TPB) has been widely used in analysing behavioural intentions to adopt Islamic finance. However, there is still little research investigating the adoption of Islamic microfinance. This study aims to determine the factors influencing behavioural intentions to adopt Islamic microfinance by developing the Theory of Planned Behaviour (TPB). The development is done by adding religiosity and knowledge variables as antecedents of attitude. A random sample of 262 members of Islamic microfinance. Variance-based partial least-squares structural equation modelling (PLS-SEM) was employed for data analysis. The results show that religiosity and have a significant influence on attitudes. Meanwhile, attitudes, subjective norms, and perceived behavioural control also significantly positively affect behavioural intentions to adopt Islamic microfinance. Then subjective norms greatly determine behavioural intentions to adopt Islamic microfinance. The findings of this study are important for Islamic microfinance to change marketing strategies. Islamic microfinance managers must develop a positive attitude through creating awareness and benefits of Islamic microfinance services by involving community leaders, especially religious leaders.

Revenue diversification and financial sustainability of microfinance institutions

PurposeThis paper aims to investigate whether revenue diversification affects the financial sustainability of microfinance institutions (MFIs).Design/methodology/approachThe study uses a worldwide panel data set of 443 MFIs in 108 countries for the period 2013–2018 and two-step system Generalized Method of Moments estimation model.FindingsThe study finds that revenue diversification has a significant and positive effect on the financial sustainability of MFIs.Practical implicationsThe findings of this study actually offer important managerial and policy lessons on MFIs’ financial sustainability. Microfinance managers and policymakers should consider revenue diversification as a strategy through which MFIs can attain financial sustainability instead of overreliance on donations and government subsidiesOriginality/valueUnlike previous studies that examined revenue diversification in the context of banking firms, this study contributes to literature by examining the impact of revenue diversification of the financial sustainability of MFIs.

Construction of Rural Financial Organization Spatial Structure and Service Management Model Based on Deep Convolutional Neural Network.

Local credit cooperatives have long played an important role in local financial services. It has made a significant contribution to agricultural production, farmers' incomes, and the economic development of rural areas. In particular, as a financial instrument serving farmers, microfinance management by local credit cooperatives plays a key role in pursuing profits and fulfilling social responsibility. It was therefore important to obtain effective instruments for combating poverty in rural areas from all walks of society. This paper first outlines the development of microfinance loans in Germany and other countries and describes the current situation and some of the challenges facing local credit cooperatives in financial management. Next, we present the basic concepts of data mining, describe the common methods and key techniques of data mining, analyze and compare the properties of the individual data, and show how the associated mining can actually be performed. Next, we will explain the basic model of microfinance for farmers and some risks in detail and analyze and evaluate the characteristics of these risks in the context of local credit cooperatives. As a result, this paper proposes an improved deep convolutional neural network. The optimized algorithm selects the optimal weight threshold value and different iteration times. The results are fewer errors, the results are closer to the correct data, and the efficiency is better than before. The algorithm is more efficient because errors have been greatly reduced and the time spent on them has been slightly reduced.

Micro Financial Perspectives of Self-Help Groups from Disadvantaged Districts of Maharashtra

The present study was planned to determine the micro-financial perspectives of SHGs from disadvantaged districts in Maharashtra. A total of 40 SHGs from two disadvantaged districts were selected using a disproportionate random sampling method. The data were collected from SHGs by personal interview method. The study revealed that SHG members strictly adhered to the principle of Saving First and Credit Later. The cumulative savings of SHGs were `83,785. The sampled SHGs had mobilized their savings in the form of an internal loan. The need-based lending approach was used which ensured a cent percent loan recovery. The average loan borrowed by SHGs from banks was fairly high due to an affordable interest rate of 4.0 percent per annum charged by banks on external loans. However, SHGs had charged 1.00 to 2.00 percent monthly interest, it accounted annually 12 to 24 percent interest on the external loan while lending. This shortfall in lending microfinance may be overcome by organizing the sensitization program for SHGs. It was concluded that sampled SHGs adopted good microfinance management practices in disadvantaged districts of Maharashtra. Further, the SHG Bank Linkage programme was an effective intervention in economic upliftment and financial inclusion for the bottom of the pyramid. This proven platform initially conceived for increasing the outreach of banking services among the poor which led to promotion of livelihoods and poverty alleviation. Further, the potential SHGs may be encouraged to graduate as members of farmers producers’ organisations/companies.

Stakeholder salience and collaboration decisions in microfinance organizations: Evidence from developing Islamic country's context

AbstractStudies mutually disagree on which stakeholders matter to the managers. Based on a finer differentiation of salience attributes—power, legitimacy, urgency, and proximity—this study finds that stakeholders that possess four attributes' types—that is, structural legitimacy, utilitarian power, organized proximity, and criticality—are considered salient by managers of microfinance organizations. Collaboration with salient stakeholders is considered indispensable by microfinance managers.

ICT-mediated organizational change in microfinance organizations: a case study

A strong research tradition on the economic and social impacts of microfinance intervention has been going on. But a dearth of studies on microfinance organizational and management perspectives is there, although the social and economic impacts of this development program largely depend on its organizational setup and intervention management. ICT (decipher!!!) has been used in microfinance organizations for quite a long period of time. This study looks into the ICT-mediated material and social changes that happen in this unique type of organization and its management. The study was conducted using exploratory case study in two organizations. A number of semi-structured interviews and focus groups have been conducted at different layers of the organizations. The study found that ICT has profound implications for change in different material and social aspects of microfinance organizations. As a catalyst, ICT causes organizational structure shrank both horizontally and vertically. Because of the use of ICT a loss-of-middle phenomenon emerges in organizational structure and a tendency of centralized decision authority prevails. It helps boosting up the operational performance and transparency and lowering the long-debated interest rate of microfinance. It engenders profound changes in human resources and socio-cultural aspects of microfinance organizations. However, if protective mechanism is not adopted then the use of ICT may have detrimental effects to the social performance of microfinance. This study contributes to the knowledge domain of ICT-mediated organizational change and the microfinance policy makers by exploring the implications of ICT to different organizational aspects. It contributes by unearthing the detrimental effect of ICT to the development outcome of microfinance intervention.

Religion of Islam and Microfinance: Does It Make Any Difference?

ABSTRACTThis study is the initial attempt to investigate first whether microfinance institutions (MFIs) perform differently in the OIC countries where Islam is the prevailing religion and second, how Islamic microfinance institutions are different (if any) from the conventional MFIs. To accomplish these objectives, we employ a dynamic difference and system-generalized method of moments estimators. Our findings tend to indicate that there are significant differences in the way Islamic MFIs performed and operated as compared to that of the conventional MFIs in certain regions. However, in other regions, there were no significant differences in operation and performance between the Islamic MFIs and Conventional MFIs. The study presents important insights for the Islamic microfinance managers and donors as well as the policy makers.

DAMPAK PROGRAM PLBK (PENATAAN LINGKUNGAN BERBASIS KOMUNITAS) YANG DIDUKUNG OLEH UNIT PENGELOLA KEUANGAN PNPM MANDIRI TERHADAP PERILAKU MASYARAKAT DAN TINGKAT KESEJAHTERAANNYA

This study aims to determine the effect of Community-Based Neighborhood Arrangement (PLBK) program from PNPM Mandiri to the behavior and welfare level of the community in Kecamatan Lalabata, Soppeng regency of South Sulawesi. This PLBK program includes the establishment of government schools, the construction of hospitals and the provision of the Financial Management Unit (UPK). This research uses mixed methods method. Quantitative methods use simple linear regression analysis while qualitative methods use in-depth interviews with Leiden Ethnosystems. The results of this study indicate that the most influential variable in increasing the economic level of the community is the interest rate provided by the UPK. While in the program of behavior change and changes in the level of community welfare, the establishment of free schools and the construction of hospitals is expected to encourage people to improve their education level and quality of health. The results of this study indicate that the function of IMM (Integrated Microfinance Management) is a solution to the problem of poverty and in rural communities.

Microfinance plus for ecosystem services: a territorial perspective on Proyecto CAMBio in Nicaragua

Drawing from discussions on the panacea problem in microfinance and natural resource management, we scrutinize a ‘green microfinance plus’ programme – Proyecto CAMBio – in a specific setting in Nicaragua, focusing in particular on its interaction with local development pathways. The programme was designed to promote biodiversity-friendly land uses through the combination of credit provision, technical assistance and conditional economic incentives. In our case study, we highlight the focus on individual producers, the implicit targeting of more established medium-sized producers, and the uncritical promotion of a particular technical model of production. The project might thereby have failed to identify and revert some negative processes of environmental degradation and did not consciously engage with the dynamics and political arenas of sustainable development. We call for a more holistic territorial perspective that is conducive to more strategic thinking about the interactive socio-technical dynamics and ensuing opportunities and constraints for different producer types and technical-commercial models. Such strategic reflection is both inevitable and political, as it impacts on the opening and closing of avenues for more or less socially inclusive and environmentally sound development pathways.

Microfinance Risk Management with Work Breakdown Structure

Building inclusive financial system in China makes microfinance products become practical tools in solving financial difficulties of small and medium enterprises (SMEs). Discuss general management risk of microfinance under effective credit structure and then analyze the Work Breakdown Structure (WBS) in microfinance management from the perspective of project management effectiveness. Moreover, use ergonomics and probability theories to find out the effects on microfinance management through institutions with simpleness and swift. It is demonstrated that optimization of microfinance management program under inclusive financial sectors can probably be beneficial to microfinance credit risk control

Microfinance and Livelihood Development in Poor Coastal Communities in Eastern Sri Lanka

Various organizations are involved in micro-financial programmes in Sri Lanka. There is limited knowledge on the impact of microfinance on the livelihood improvements among poor coastal communities who were affected by Tsunami in Eastern Sri Lanka. This study investigated the effectiveness of microfinance support for coastal communities&rsquo; livelihood development in Trincomalee. A survey was conducted using stratified randomly selected 99 microfinance beneficiary households in three identified coastal villages in three Grama Niladhari Divisions in Kinniya. The analysis was based on 2006 information as a benchmark. The analysis was conducted using a multiple linier regression with the factors determining the revolving fund efficiency (RFE). The study found an average of 39.5% and 14.2% increase in income and private savings, respectively in agriculture sectors. Although the poor and the poorest groups have been reached by microfinance institutions, 65% of their clients seem to be from the non-poor groups. About 90% of the young people reported lack of opportunities for modern livelihood supports. The RFE was 0.32% indicating that it was not well adopted in practice. This may be due to lack of responsiveness of the Community Based Organizations (CBO). The results of multiple regression analysis showed that age, education and family income and weakly facilitated RFE was affected significantly by private savings. To improve livelihoods of poor coastal communities, effective capacity building of CBOs on microfinance management, training and technical supports to young people in alternative non traditional livelihoods and creating market opportunities are important. <strong>Key words</strong>: Livelihood; Microfinance; Coastal Communities; Eastern Sri Lanka DOI: <a href="http://dx.doi.org/10.4038/tar.v22i3.3706">http://dx.doi.org/10.4038/tar.v22i3.3706</a> &nbsp; <em>Tropical Agricultural Research </em>22(3) (2011) 330-336

A critical review of CGAP-IADB policies inspired by the Fondo de Desarrollo Local, Nicaragua

In 2005, the Fondo de Desarrollo Local (FDL) gained the international Inter-American Development Bank (IADB) prize for the best non-regulated microfinance institution in Latin America. A year later, in 2006, the Central American Bank for Economic Integration (BCIE) selected the FDL from 78 Central American MFIs as the winner of its Award for Excellence in Microfinance Management. Its leadership in the Latin American Rural Microfinance Association (FOROLAC), its exceptional outreach to rural producers and its development orientation, coupled with entrepreneurial viability and extraordinary sustainability, contributed with these recognitions. Nevertheless, analysing the incentives and pressures emanating from the current mainstreaming microfinance paradigm, this article expresses deep concerns about the anti-rural and anti-agricultural bias of international microfinance policies and the negative effects that they engender for the further growth of microfinance for a more dynamic and socially inclusive agricultural development in Latin America.

A critical review of CGAP-IADB policies inspired by the Fondo de Desarrollo Local, Nicaragua

In 2005, the Fondo de Desarrollo Local (FDL) gained the international Inter-American Development Bank (IADB) prize for the best non-regulated microfinance institution in Latin America. A year later, in 2006, the Central American Bank for Economic Integration (BCIE) selected the FDL from 78 Central American MFIs as the winner of its Award for Excellence in Microfinance Management. Its leadership in the Latin American Rural Microfinance Association (FOROLAC), its exceptional outreach to rural producers and its development orientation, coupled with entrepreneurial viability and extraordinary sustainability, contributed with these recognitions. Nevertheless, analysing the incentives and pressures emanating from the current mainstreaming microfinance paradigm, this article expresses deep concerns about the anti-rural and anti-agricultural bias of international microfinance policies and the negative effects that they engender for the further growth of microfinance for a more dynamic and socially inclusive agricultural development in Latin America.