Role Of Microfinance Institutions Research Articles

Creating Enabling Environment for Micro-finance Sector Development in Vietnam: A Legal Framework Perspective

KEYWORDS Microfinance Institutions. Legal Framework. Government Policy. Poverty Reduction ABSTRACT There is a long standing consensus in most developing countries that micro-finance is an important tool to reduce poverty. With the majority of people in developing countries such as Vietnam living in rural areas, the conventional wisdom is tha t micro-finance institutions can be u tilized to direct resources to poor ru ral communities. It is argued that the poor lack access to financial resources and therefore, one crucial strategy for achieving pro-poor growth and poverty reduction goals is to increase the role of Micro-Finance Insti tutions (MFIs). However, developmental economists have long noted the complexity of MFIs providing effective rural credit delivery system without a vibrant legal framework that creates an enabling environment. Given that MFIs seek to reduce poverty in rural areas through providing sustainable micro-finance facilities, it is unfortunate that the important role played by a legal framework has largely been neglected by researchers. Using Vietnam as a case study, this research seeks to examine the legal framework governing the activities of MFIs in Vietnam, present the shortcomings of the legal framework and then suggest some legal framework reforms needed. The understanding is that, a reformed legal framework will facilitate a rapid development of MFIs in Vietnam and consequently alleviate rural poverty.

A cross-country analysis to investigate the true role of microfinance institutions in developed and developing economies

It is perceived that the microfinance institutions (MFIs) served millions of poor people by providing them easy access to loans with better repayment rates. The purpose of this study is to conduct a cross-country comparison among three Asian developing countries (Bangladesh, Pakistan, and India) and two developed economies (UK and USA) to evaluate the effectiveness of their MFIs in serving low-income people. The microfinance data for six years from 2006 to 2011 are collected from authentic sources. The findings of the study reveal that Bangladesh and India are comparatively ahead of other nations in serving poor people by providing them microcredits.

Bridging the SME Financing Gap in Ghana: The Role of Microfinance Institutions

Financing Small and Medium-Scale Enterprises (SMEs) to achieve the desirable growth and expansion has been topical for governments, policymakers, non-governmental organizations (NGOs), financial and non-financial institutions. The recent upsurge in the interest of finding ways of bridging the financing gap faced by SMEs by these stakeholders have been necessitated by the enormous contributions of SMEs to the economic development and growth of countries in areas of job creation, GDP and entrepreneurial skill development. This research therefore sought to access the role of one of the stakeholders, microfinance institutions (MFIs) in helping to bridge the financing gap faced by SMEs in Ghana. The research established that there was indeed the existence of SME financing gap in the country as most of them were denied access to credit by commercial banks and other financial institutions. The research revealed that the operations of microfinance institutions (MFIs) are having positive impact on SMEs. The study also revealed some risk mitigation tools used by MFIs in granting loans to SMEs which included provision of collateral security in the form of land or any other valuable asset, business records, credit history among others. The research concluded with some recommendations on how the SME financing gap can further be bridged by MFIs and other stakeholders which included provision of support services to SMEs by MFIs such as training services in credit management as well as the need for MFIs to improve service delivery such as faster loan approval times.

Conceptual Framework: The Role of Microfinance on the Wellbeing of Poor People Cases Studies from Malaysia and Yemen

The role of microfinance institutions in poverty reduction and wellbeing improvement has attracted the policymakers’ attention in the developing countries across the globe as well as Malaysia and Yemen. The underlying logic is that by providing microfinance services, poor will be able to participate in the economic market through forming their small businesses. Consequently, they will be able to generate income and improve their households, self esteem and efficacy. Despite the popularity and apparent success of microfinance, there is no clear evidence that asserts the positive impact of microfinance scheme. Therefore, the aim of this research is to propose a conceptual framework in the role of Malaysian and Yemeni microfinance on the poor’ wellbeing. Microfinance servers refer to financial, nonfinancial and social services while the clients’ wellbeing refers to the clients’ household, micro and small enterprises performance and empowerment. The mixed method is employed to carry out the objective of this research. The cross-sectional survey with the randomized control trait is used for collecting the quantitative data while the regression logistic with chi-squire are used to analysis. In contrast, the semi interview is conducted to collect and analysis qualitative data. The three microfinance institutions of Amanah Ikhtir Malaysia, Yayasan Usaha Maju and Economic Fund for National Entrepreneurs represented Malaysian microfinance while the Al-Amel Bank represented Yemeni microfinance.

Financial Inclusion Strategies for Inclusive Growth in India

The two decades of post reform period in India witnessed transformation of the economy in to a higher growth plane signaling the arrival of the country in the global stage. But this robust growth failed to translate the economic well being of the large number of marginalized and excluded sections due to structural rigidities. For economic growth of a nation to be sustainable, it requires all sections of the society included and participates in the growth process. One of the many alternative strategies available for Inclusive Growth is through developing an Inclusive Financial System. Financial inclusion is useful to facilitate economic transaction, manage day today resources, improve quality of life, protect against vulnerability, make productivity enhancing investments and leverage assets. But the indicators of financial use in the country are very poor and there is wide inequality among different sections of the society, between rural and urban areas and between geographical areas. In this context, the paper builds the case for developing inclusive financial system for achieving inclusive economic growth in India. The rationale for inclusive financial system, taking banking services to the vulnerable sections, role of micro finance institutions in spreading financial literacy and the role of technology in taking financial services available & affordable to the poor are discussed in the paper.

Research Study about the Role of MicrofinanceInstitutions in the Development of Entrepreneurs

Research Study about the Role of MicrofinanceInstitutions in the Development of Entrepreneurs

Lembaga Keuangan Mikro dan Pengentasan Kemiskinan: Kasus Lumbung Pitih Nagari di Padang

This study explores the advent of microfinance institution that has been an important development in recent years. Through case study on one microfinance institution namely lumbung pitih nagari located in Padang, West Sumatra, Indonesia, this study found that the existence of the micro credit institute has been influenced by several factors such as state regulations. In 1997, the central bank of Indonesia (BI) carried out regulatory reforms in order to reduce the risk of bank failures. This regulation in fact has weakened the role of microfinance institutions in giving financial services to small-medium enterprises (SMEs). However, in the reformation era, many local microfinance institutions emerge as the Ministry of Cooperation and Small-Medium Enterprises has officially given support for the betterment of SMEs through soft loan mechanism. LPN has been one of its kind which is able to run profitably and at the same time to facilitate credit for SMEs in the region.

Factors Leading to the Malfunctioning of Credit Markets in Less-Developed Economies and the Role of Microfinance Institutions in Poverty Alleviation

This mimeo discusses the relative significance of Microfinance to the poor in developed Economies. We analyse different vehicles of microfinance to the poor in less developed Countries (LDCs hereafter). The analysis also covers a global overview for Microfinance activity, and the dominant factors leading to the malfunction of credit lending in the LDCs and its contribution to the persistence of poverty. It concludes with an emphasis on the role of microfinance institutions in availing credit and the importance of innovative perspectives in dealing with conventional hurdles.