Abstract
Over the last decade, the theory that poverty in the world’s poorest regions could be alleviated by providing small loans to micro-entrepreneurs has become increasingly popular. This volume examines the effectiveness of this theory when put into practice. The book presents empirical evidence drawn from comparative experiences in seven developing countries and produces some startling conclusions. This work should be essential reading for all those interested in development, poverty-reduction, social welfare and finance. Volume One provides a detailed analysis of this theory and offers policy recommendations for practitioners in the field.
... Contrary to arguments made by several authors that MFIs serve only the not too poor e.g. Hulme & Mosley (1996), and that their impact on the core poor is insignificant, Shamsuddoha & Azad (2004), the MFIs do serve the core poor and have had impact amongst the core poor as they have had on the not too poor. This study indicates that the rise in the income level of the core poor has been higher in divisions that have a stronger presence of MFIs than those with a weaker presence and this seems to suggest the positive effect of the MFIs. ...
... Finance and the Poor Hulme & Mosley (1996), argued that MFIs in Bangladesh have had no real impact on the core poor while Shamsuddoha & Azad (2004) have argued that their impact on the core poor do not appear to be as hugely successful as was initially expected. i.e. they have had only a partial success in fighting poverty amongst the core poor. ...
... In Khulna, poverty declined by 10.1% and 5.0% respectively in both the urban and rural areas between 1995 and 2005 while Rajshahi also had a poverty decline rate of 11.3% and 13.4% in both the urban and rural areas between 1995 and 2005. 15.1%, 7.4% and 1% for Barisal, Chittagong and Dhaka respectively. ...
This paper presents the findings of a study that investigated the impact of Microfinance Institutions in Bangladesh on the core poor i.e. those living on less than $1USD/day and the correlation between the presence of these institutions and poverty in the five Divisions that were examined in the country. Bangladesh is one of the most populous countries in the world with a high level of poverty. This study looked into the operations of these Microfinance Institutions between 1995 and 2005 to establish the correlation between their presence and the poverty level in the locations where they have a strong presence and a weak presence. The study looked into the efforts of Microfinance institutions in poverty alleviation to see if they focused solely on the poor or also catered to the challenges of the core (extremely) poor people that had no valuable possessions or collaterals to obtain loans from them in addition to examining the support of the top three Microfinance Institutions for the vulnerable especially poor women in terms of empowerment in the period under review. This paper concludes with implications of the presence of microfinance institutions for poverty reduction in a geographical location and recommendations for further research.
... These theoretical perceptions have been corroborated by several studies that demonstrate the empirical evidence of the positive impact of microfinance on poverty reduction. Using a sample of seven countries including Bangladesh, Bolivia, India, Indonesia, Kenya, Malawi and Sri Lanka, Hulme and Mosley (1996) show through the control group approach that microcredit has a positive impact on household living conditions in that 91% of poor borrowers had an increase in their income and, above all, the effect was higher (more than 50%) for poor and vulnerable households. Khandker (2005), used a panel sample of 1,688 poor households in Bangladesh and a dynamic model and concludes that microcredit has a positive impact on the living conditions of poor households, especially for women, through an increase of consumption spending. ...
... Taking a sample of 445 households from 14 villages in Thailand, Kyereboah-Coleman (2007) explains that this selection bias is due to the fact that the richest people have a higher probability of participating in a microfinance program. Similarly, the results of Hulme and Mosley (1996) and Khandker (2005) were respectively challenged for methodological and data quality reasons by Morduch (1999) and Roodman and Morduch (2009). ...
... The results obtained by the quantile regression confirm those of the PSM insofar as the distribution of the poverty index is in no way influenced in rural areas whereas it is in urban areas. Moreover, the results raise one of the controversies in the literature that microfinance benefits the rich rather than the poor (Hulme and Mosley, 1996). The empirical evidence observed in Table 5 confirms this point of view. ...
Microcredit is a specific means of fighting poverty in developing countries. Given the contrasts in its impact on poverty raised in the literature, evaluations with more rigorous methods are needed. This paper assesses access to microcredit impact on poverty through data from Ghana collected in 2004. The propensity scores matching method concludes that access to microfnance has a positive impact on household relative poverty index in the whole sample. Otherwise, this impact differs by place of residence. Indeed, while microcredit impacts positively poverty index in urban area, it has no impact in rural area. The quantile regression method has also been used to evaluate microcredit access on poverty distribution. The results show microcredit increase second and third quartile meaning microcredit is more beneficial for the richest household than the poorest. This result corroborates the schism hypothesis of microfinance denounced in the literature.
... Poverty will remain one of the most pressing global development challenges for years to come. With a substantial part of the world's poor relying on limited financial resources that are often unreliable and expensive (Collins et al. 2009), the idea of microfinance as a powerful antipoverty policy tool became mainstream, mobilizing actors within and outside the development industry (Hulme and Mosley 1996;Otero and Rhyne 1994). The underlying assumption was simple: providing credit (and other financial services such as savings and insurance) to the poor would boost their income-generating capacity, unbridle their entrepreneurial spirit, support the development of businesses, and ultimately alleviate poverty (Ledgerwood and White 2006;Morduch 1999). ...
... Another important microfinance innovation is what Hulme and Mosley (1996) refer to as 'progressive lending', which consists of lenders giving borrowers small loans at the beginning of the contract with a promise of larger loans if repayments are satisfactory. Progressive lending is an effective device that allows screening out 'bad' borrowers before loans get bigger, and can also facilitate the formation of long-term contractual relationships between lenders and borrowers based on trust, with positive effects on market efficiency (Stiglitz and Weiss 1983). ...
... Group members will be responsible if there are members of the group who fail to pay back their loans ( Zapalska et al., 2007;Guttman, 2007). In addition to the loan repayment method, the success of microcredit programs also depends on the amount of loans issued ( Pereira & Mourao, 2012;Norma & Jarita, 2010;Roslan & Karim, 2009;Hulme & Mosley, 1996). In accordance with the Grameen Bank approach, the amount of credit granted will be increased by the loan. ...
... Bhatt et al. (1999 look at some of the failure factors of microcredit programs in the United States, which are caused by laws manipulating over the interest rates charged to clients. according to Hulme and Mosley (1996), the imposition of higher interest rates could accelerate the ability of independent microcredit institutions, but it will limit the range of customers. However, Gibbons and Meehan (1999) argue that there are no conflicting performance issues between microcredit programs with outreach. ...
The objective of this study is to investigate the relationship between the microcredit program and the performance of microenterprises, as well as assessing the impact of the intermediary service delivery system on the relationship between the microcredit program and the performance of microenterprises. Primary data were collected from 756 micro-enterprises under the microcredit program Amanah Ikhtiar Malaysia (AIM) and Tabung Ekonomi Kumpulan Usaha Niaga (TEKU N), which are two most active microcredit programs in Malaysia. The multiple regression analysis showed a significant positive correlation between the performance of microcredit program and microenterprises. Empirical findings also explain the elements of modes of financing under the management of credit products, as well as the two elements under the social development programs (entrepreneurship development, monitoring and supervision) as having a clear effect of the mediators of the relationship between the microcredit program and the performance of microenterprises. However, the study found that elements of operational efficiency in the management of credit products do not affect the relationship between the two variables. These findings lucidly reveal the importance of balance between the efficiency of the management of credit products and a program of social development in the service delivery system of microcredit program.
... Page | 909 collective insurance schemes, mutual aid groups, or community-based risk-sharing initiatives. Their primary purpose is to establish a safety net that mitigates the adverse financial consequences arising from unforeseen events or emergencies [11]. ...
Most developing countries across the world exhibit a duality of formal and informal economies. The current scenario is evidence that policymakers in India have made efforts to restrict various forms of informal finance by categorizing them as usurious and replacing them with newer banking concepts and practices. However, it is clear that the formal financial system is not exempt from theoretical and implementation flaws, leading to a significant demand and relevance for informal financial arrangements. This paper provides a concise overview of informal finance, its categorization, the shift of focus from credit supply to collective arrangements, and its enduring prevalence. The paper aims to emphasize the contributions of informal finance in promoting savings, facilitating credit provision, and sharing economic risks in the Indian market. Additionally, it critically examines the strengths, weaknesses, and the role of informal financial arrangements in the Indian economy
... Currently, there are arguments that micro-lending to poor women holds the key to 21st century's sustainable economic and social development (UN, 2011). Indeed, Mohammed Yunus, founder of the Grameen Bank's microfinance program in Bangladesh, has suggested that microcredit is one simple idea that can eradicate global poverty among women (Hulme & Mosley, 1996). ...
This paper aims to examine the nature of loan schemes for the urban informal sector workers (UISWs). This paper believes that examining loan schemes is an effective way of understanding the conditions of UISWs. Moreover, analyzing the perception of UISWs and loan providing agencies (LPAs) to each other is also significant in this regard. An important objective of this study was to find out the challenges that faced by UISWs. This study finds that negative perception (18.82%) towards loan providing agencies, lack of trust (22.35%), no need of taking loan (4.71%), possibility of being failure of paying back loan (17.25%), taking loan is a bad practice (23.75%) are some reasons of not taking loan. Present study finds that having political networks and socio-economic status have relations to get loan. Besides, loan providing agencies give importance to economic benefit of the agency instead of social development of UISWs.
... A caveat should be made that the concept of SLA has been extended with various factors in recent decades. On the one hand, it enriches SLA [29,81], however, on the other hand it also results in fragmented evidence due to the lack of a consensus on index and methodologies [82], leaving policy makers to employ SLA grounded in their own understandings [80]. Although "one size fits all" SLA [80] is neither possible nor appropriate, it will be hugely beneficial to explore a more universal SLA under specific contexts. ...
Many poverty−alleviation−relocation projects in China resort to tourism to sustain immigrants’ livelihood in new communities. However, how tourism contributes to poverty elimination and maintaining gains is yet to be discovered. Based on the sustainable livelihood concept, this study constructs a three-dimensional index system to evaluate livelihood sustainability and identify potential factors in three relocated tourism communities. Results show that most resettled residents have median-level livelihood sustainability. Livelihood capital, strategies, and environment contribute to livelihood sustainability in decreasing order. Regarding livelihood modes, tourism−led livelihood takes the first position in terms of supporting livelihood sustainability, followed by outside−work−led, local−work−led, and government subsidy−led livelihoods. Regarding obstacle factors, annual household income, number of household workers, and education levels are shared by relocated households across different livelihood modes. Aside from policy suggestions on survey sites, this study provides a holistic framework and enlightens the generalizable paradigm to the analysis of sustained livelihood via tourism development in relocated communities.
... The social banking approach and business approach (Rankin, 2001;Takahatake and Maharjan, 2002) are two methods adopted by microfinance to attain the socio-economic upliftment. The success of both the approaches individually is debatable (Hulme and Mosley, 1996;Ledgerwood, 1997), but the combination of both the approaches (Takahatake and Maharjan, 2002) is more effective for socio-economic empowerment. ...
... Moreover, this study further examined the role of operational efficiency in the relationship. Outreach, sustainability, and efficiency are widely used in microfinance, and some studies use them even without a clear definition (Ledgerwood, 1998;Hulme & Mosley, 1996). There are various indicators for measuring outreach, financial sustainability, and operational efficiency based on their concepts (Schreiner & Yaron, 1999;Ledgerwood, 1998;Yaron, 1994), and studies have used a variety of indicators to study the relationship (Nurmakhanova et al., 2015;Okumu, 2007). ...
Microfinance Institutions (MFIs) provide financial services to those who have no access to finance and are hence considered a tool for poverty alleviation. However, the clear relationship between the depth of the MFIs and their sustainability is still lacking as there is an ongoing debate on whether the two components complement each other or whether there exists a tradeoff. This study applied the panel regression analysis to the data from 44 MFIs of Nepal from 1999 to 2019 and explored the interrelationship between depth and sustainability of MFI in the Nepalese context. In addition to the two variables of interest, this study further analyses the interaction effect of operational efficiency. The findings show a significant tradeoff relationship between outreach and sustainability at a 99% confidence interval, further moderated by operational efficiency. As a result of increased operational efficiency, MFIs can have better outreach and sustainability. These findings can thus provide a better policy prescription that promotes operational efficiency and ultimately improve both the outreach and sustainability of MFIs.
... The direction of supply-side selection bias due to the non-random placement of microfinance institutions is uncertain (Hulme & Mosley, 1996;Armendáriz & Morduch, 2010). Poverty-oriented donor MFIs tend to be established in poorer areas, thus causing a downward bias in measured impacts on income-related outcomes. ...
... A critical scrutiny of the entire work done on perception analysis is skewed towards the success or failure of the MFIs Two major works in this direction are the works of Kamal and Jalaleddine (2015), who after review of the existing literature on the impact of microfinance broadly divided into three categories a) The first category examines the impact of microfinance on poverty (Hulme and Mosley, 1996;Copestake & James, 2002;Khandker, 2005;Tedeschi, 2010). b) The second strand of literature deals with the impact of microfinance on women's empowerment (Hashemi et al., 1996;Rahman et al., 2009;Garikpati, 2012). ...
The study entitled “A study on the awareness of benefits, perceptions of borrowers to problems in finance and Utilisation of Microfinance” was centred in the first cent percent literate district of the nation but confined to the rural areas. The methodology adopted was by using a pretested structured questionnaire and eliciting the response. The results revealed that the awareness with regard to poverty reduction, factors on access and terms of conditions were as high as 98 percent, whereas that on awareness favouring utilisation and updation of knowledge was cent percent. The eight factors in perception included 3 with regard to aspects of financial support, three with regard to preconditions and two regarding compliances to awareness on the first three aspect of perception. 96 to 100 percent agreed to both adequacy and timely release, in case of the second, cent percent agreed that it was properly veted and there were neither conditions or strings attached, in case of compliance it was more than 95 percent. 94 percent of the borrowers used the money for the purpose whereas six percent deviated from the actual purpose. Mixed response was observed with regard to the utilisation however, the study revealed that it generated good amount useful for education, household expenditure, wealth creation and social security. Correlation studies revealed that age, education, occupation levels are all positively correlated with all five factors of awareness but not significant. However, in case of both awareness and perception there was a significant positive correlation between the factors taken up in the study. Int. J. Soc. Sc. Manage. Vol. 8, Issue-1: 312-319
... Park and Ren (2001) report that many MFI' lending contracts have reported a 90% rate of repayment and some of them reported a 100% repayment rate. The MFI' client survey indicated that the impact of the loans is widespread and visible on incomes and has extended effects on gender empowerment, educational attainment, and offset consumption volatility (Hulme & Mosley, 1996;Khandker, Khalily, & Khan, 1995;Park & Ren, 2001;Pitt & Khandker, 1998). ...
We study the credit repayment effectiveness when microcredit is operating in combination with the counter-guarantee mechanism. We use a sample of 176 poor urban borrowers from the Guangzhou Municipal Labor and Social Security Bureau (GZMLSSB). Their loans were guaranteed by the Guangzhou Financing Guarantee Center (GZFGC), then counter-guaranteed by borrowers. The size of loans offered to urban borrowers varies from 20,000 RMB to 30,000 RMB per individual per year (60,000 RMB if part of a partnership and maximum of 50,000 RMB per individual in a given loan cycle). We estimated the model using a conditional mixed process given the binary dependent variable and a binary endogenous explanatory variable in the model. We find that the real estate mortgage as a financial counter-guarantee mechanism has no effects, but a training certificate as a non-financial counter-guarantee mechanism has a negative impact on the microcredit repayment rate. Group lending and focusing on women have no impact as well. The findings help to minimize the management cost of pre-default and default risk on microcredit loans in GZMLSSB and other similar projects by targeting university graduates. Our study is the first to assess the impact of microcredit mechanisms together with counter-guarantee on loan repayments in China. K E Y W O R D S counter-guarantee, mechanisms, microcredit, repayment rate
... The discourse on finance also brings to the fore the classification of financially excluded sections into voluntary and non-voluntary exclusion (World Bank, 2008;cross ref: Shankar 2013). The category of voluntary financial exclusion may be constituted of extremely poor category who decide not to participate in any financial activity due to lack of confidence (Ciravegna, 2005;cross ref: Hermes and Lenski, 2011), followed by those who are denied participation as they are often viewed as "bad credit risk" (Hulme and Mosley, 1996;Marr, 2004;cross ref: Hermes and Lenski, 2011) especially in case of group lending where the very poor may be excluded by the group as they may jeopardize the position of the whole group (Montgomery and Kurmanaleiva, 2003). ...
... The growth of microenterprises plays a crucial role in encouraging economic development by producing employment (job opportunities) and increasing productivity (Hawariyuni, 2014). Mosley (1997) for example, deliberated on how microfinance has helped to improve the income and employment of borrowers of the BancoSol lending program. In a related study where the Subsidy Dependence Index (SDI) was used, Mosley & Hulme (1998) showed how BancoSol has had a positive impact on income in Bolivia. ...
Objective – This study proposes an integrated Islamic microfinance model in alleviating poverty and improving the performance of microenterprises based on a case study of Indonesia, by focusing specifically on BRI Microbanking. Design/methodology – This study adopts the exploratory study to construct the integrated Islamic microfinance with the purpose to alleviate poverty and enhance the business performance of enterprises. Results – As Islamic microfinance is known widely due to the high demand from Muslim countries. Since, it plays a crucial role effectively in alleviating poverty and developing the business performance on enterprises, particularly on microenterprises. Presently, many scholars attempted to build a successful Islamic microfinance model by using Islamic financing instruments such as mudarabah, musyarakah, and murabahah. This study attempts to build an integrated Islamic microfinance model by using BRI Syariah Micro as a case study. It is expected that this integrated Islamic microfinance model can enrich existing models in terms of social and economic aspects. Originality/Value – This research concentrates on proposing an integrated Islamic microfinance model based on the case study of BRI Syariah Microbanking. There seems to be a gap in the literature on the actual implementation of integrated Islamic microfinance in the world. The study highlights major factors to be emphasized to ensure the effectiveness of proposing an integrated Islamic microfinance model for BRI Syariah micro banking to alleviate poverty and to improve the performance of microenterprises.
... Outreach or the market cannot be a strong basis for MFIs sustainability However, authors like Hishigsurem (2004), Mersland and Strom (2009) and later Kinde (2012) have argued that a larger number of borrowers determine the number of poor clients that can be reached and served. Hulme and Mosley (1996) still believed that microfinance services should be centred on the poor and that without the poor, MFIs is no longer different from the commercial banks. ...
A number of Microfinance Institutions (MFIs) both in Ghana and in other countries have had risk-related challenges that have affected their sustainability. In recent years, strategic decisions of risk have affected MFIs operations in Ghana significantly. This paper seeks to demonstrate the relationship between risk factors and MFIs sustainability in Ghana. The paper adopts a quantitative strategy for the data source with a deductive approach. The hypothesis carried out on various drivers of sustainability were upheld with a significant p-value of 0.000 < 0.01p and concluded that all the drivers of sustainability identified have a significant effect on MFIs sustainability in Ghana. The measurement model and structural model of the Partial Least Square Structural Equation Model (PLS-SEM) was used to measure the relationship between risk and MFIs sustainability. The path coefficient between risk factors and the drivers of MFIs sustainability was 0.582 with a significant p-value of 0.000 < 0.01. This establishes that risk factors have a significant effect on all drivers of microfinance institutions sustainability. Operators of microfinance in Ghana need to take an appreciable and well-managed level of risk to enhance their sustainability.
... Moreover, it is quite impossible to make the micro credit institution to become more sustainable, without the necessary strategies for avoiding risks and excessive costs. In fact, Hulme and Mosley (1996) notes that without accurate break-even interest rates, it will be extremely difficult for microcredit institution to sustain its operations. What this implies is that the interest rate ought to be higher, so as to make sure the revenue covers the operational costs and every other expenditures. ...
This academic study evaluates the evaluate the relationship between new business start up and micro credit institution and business growth of small scale enterprises that operates in six states that made up the South-west geopolitical zone of Nigeria. The study, which is based on descriptive research methodology, involved the use of data from both primary and secondary sources. The stratified sampling technique was used for determining the sample population, while well structured questionnaires was used as the main tool for collection of primary data. The Microfinance Bank records of clients served as the main source of secondary data for this study. Both the descriptive and inferential analytical techniques of the SPSS packaged were used to analyze the data obtained from the respondents. The results indicated significant relationship between new business start-ups and business growth of Small Scale Enterprises (SSEs). The findings also revealed that increasing the start-up capital will increase the chances of business survival and growth. Consequently, we recommend that the federal, state and local government should create lending programs that will enable aspiring entrepreneurs to have more access to microcredit. We also suggest that Nigerian government should enact laws and implement policies that will make it easier for small scale entrepreneurs to obtain finance necessary for the expansion of their businesses.
... Nonetheless, several studies present arguments in favour of the existence of a trade-off between financial sustainability and outreach (see, e.g. Conning 1999;Hulme and Mosley 1996;Zeller et al. 2003). In these studies, it is argued that in an attempt to attain financial sustainability, MFIs reach out to the 'better-off' of the poor rather than the poorest (Chowdhury 2009;Epstein and Yuthas 2010). ...
The financial sustainability of microfinance institutions (MFIs) is crucial for the continual existence of the microfinance industry. As a result, emphasis has been placed on the financial sustainability of MFIs over the past few years. However, with the primary goal of the industry being the attainment of social outreach, the emphasis on financial sustainability has raised concerns about a potential adverse effect on outreach. Using data on 1595 MFIs in 109 countries, we examine if there is a trade-off between financial sustainability and outreach. The evidence shows that there is a trade-off between sustainability and outreach depth, but complementarity between sustainability and outreach breadth.
... Murdoch (1999) makes a link between government-failed assistance to the poor and what he terms "unusual" financial institutions, which have become known as MFIs. Many argue that government's attempt at assisting the poor failed and that for all intents and purposes, government was creating a culture of dependency and disincentives thereby making the plight of the poor even worse (Adams & Von Pischke, 1992;Balkenhol, 2007;Hermes, Lensink, & Meesters, 2011;Hulme & Mosley, 1996;Johnson & Rogaly, 1997). However, the mushrooming of "unusual" financial institutions that have been developed to service low-income households excluded from the formal banking sector has allowed such households to improve their standing in society. ...
We investigate whether information and communication technologies (ICTs) can be used to achieve social good as they are implemented in microfinance institutions (MFIs) in Zambia. We find through information gathered from interviews with MFI officials that their organizations are focused primarily on survival in a competitive financial climate. Additionally, our findings reveal that most MFI business within the context of ICTs only promotes social good by default and not by design. This means that social good is not a primary mover or something that MFIs plan to achieve when they integrate ICTs into their business models but that it happens because of the assumed mission of primarily serving the informal sector small business and microbusiness and the low‐income clients.
... In an overview of MFIs, Hulme and Mosley (1996) had shown they tend to have a high percentage of females in their loan portfolio. The many reasons for this are discussed, classified and summarized in this section. ...
Our main research question is whether, using more robust statistical methods, the effect of the percentage of female borrowers of a Microfinance Institution (MFI) on the delinquency of the portfolio still holds. By using two samples of Latin American MFIs, we show that there is no relation between the percentage of female borrowers in an MFI portfolio and MFI economic outcomes. The relation between portfolio-at-risk and gender is not found when using a dynamic panel to account for serial autocorrelation, thus not accepting the hypothesis that women repay better than men. Hence, this paper suggests that MFIs lend more to women for reasons beyond just "economic" ones, such as empowering women and helping poor people, otherwise unable to access credit lines, get loans in Latin America. We thank Prof. Jose Fajardo for his comments in an earlier version of this paper. We also thank Juliana Queiroz, Layla Mendes, Luiz C. Sacramento, the discussants and participants of the VII Meeting of the Brazilian Finance Society and the XLI Meeting of Brazilian Academy of Management, where this paper was presented. We also thank the financial support from the National Research Council of Brazil (CNPq), Higher Personnel Advancement Coordination (CAPES)-Finance Code 001, and the Getulio Vargas Foundation (FGV).
... Right from its inception in Latin America and Asia in the 1970s, the focus of microfinance has generally been on women. MFIs target women borrowers to accomplish two main objectives: to achieve better credit repayment rates and to reduce poverty since poverty is high among women (Abdullah & Quayes, 2016;Hulme & Mosley, 1996). Due to its focus on women, women participation in the leadership of MFIs is satisfactory. ...
... Right from its inception in Latin America and Asia in the 1970s, the focus of microfinance has generally been on women. MFIs target women borrowers to accomplish two main objectives: to achieve better credit repayment rates and to reduce poverty since poverty is high among women (Abdullah & Quayes, 2016;Hulme & Mosley, 1996). Due to its focus on women, women participation in the leadership of MFIs is satisfactory. ...
As far as we know, the question of whether increasing gender diversity on boards of microfinance institutions carries any implications for their financing decisions has not been answered. To answer this question, we employ a global dataset from 441 microfinance institutions located in 69 countries to investigate the effect of board gender diversity on capital structure. A robust negative and statistically significant effect of board gender diversity on capital structure is produced by the three panel regression estimation techniques used in this paper. Our conclusion is that board gender diversity is a significant driver of MFI’s capital structure and that it decreases the gearing levels of MFIs and, by extension, lowers their exposure to bankruptcy risk.
... Microfinance has been promoted by many national and international developmental agencies as a tool for poverty alleviation and development of poor communities (Matin et al., 2002;Armendariz and Morduch, 2010;Armendáriz and Labie, 2011).The core objective of microfinance institution (MFIs) programs is to bring financial services to such resource-constrained communities. Formal institutions usually shy away from the poor because they lack collateral and because of information asymmetry and high transaction costs (Hulme and Mosley, 1996;Morduch, 2000;Matin et al., 2002;Armendariz and Morduch, 2010;Armendáriz and Labie, 2011). ...
The alignment of microfinance programs with the context and expectations of the recipients is critical for ensuring clients' satisfaction and desired program outcomes. This study sought to investigate the extent to which the objectives and design of the BRAC microfinance program match the expectations, context and characteristics of female borrowers in a rural agrarian setting in Uganda. Quantitative and qualiative methods were used to obtain socio-demographic, personality and microenterprise (ME) chaaceristics of existing borrowers, incoming borrowers and non-borrowers and to obtain information about the microcredit program. We found that BRAC uses a modified Grameen group-lending model to provide small, high-interest rate production loans and follows a rigorous loan processing and recovery procedure. BRAC clients are mainly poor subsistence farmers who derive income from diverse farming and non-farm activities. The major objective to borrow is to meet lump-sum monetary needs usually for school fees and for investment in informal small non-farm businesses. Many borrowers use diverse sources of funds to meet repayment obligations. Defaulting on loans is quite low. The stress cause by weekly loan repayment and resolution of lump-sum cash needs weer identified as reasons for women to stop borrowing The limited loan amounts, the diversions of loans to on-production activities, the stages of the businesses and the weekly recovery program without a grace period may limit the contribution of these loans to ME expansion and increase in income.
Labour productivity (gross value added per worker) turned out to be much lower in manufacturing than in trade and services. The own account enterprises are worse off compared to the establishments. Further, the performance of the urban units is better than their rural counterparts. Capital–labour ratio proxied by fixed asset–labour ratio also follows a similar pattern. Manufacturing in both the rural and urban areas is endowed with lower capital–labour ratio and the establishments are more resourceful than the own account enterprises. Hence, it may be inferred that those who are self-employed are usually grossly engaged in low-productivity activities with poor capita endowment. In other words, the own account enterprises are the ones which comprise residual type employment while some of the establishments are dynamic and may have decided to remain small in order to avoid the tax burden. It may be further inferred that the subsidy and the provision of state support to the relatively larger units falling within the domain of the formal sector may not be adequate to encourage the unorganized sector units to register and become a part of the organized sector. The gains will have to be substantial for a firm to register itself as a formal sector unit. The unorganized manufacturing sector comprises a large majority of the total manufacturing employment in India. To ensure decent wages to the workers in this sector and to ensure pro-poor growth the units in this sector have to be made economically viable. One way of judging their economic viability is to consider the performance index in terms of technical efficiency relative to the organized sector units. The unorganized sector includes both household and non-household units. The analysis tends to offer little evidence in favour of positive links between the organized and the unorganized sector units perceived in terms of inter-sectoral efficiency differences and associations between them. Within the unorganized sector, units rather seem to reveal similar characteristics in terms of performance indicators while the organized sector units are much better performers. More importantly, the unorganized sector units are not able to benefit in the process of rapid economic growth.KeywordsUnorganisedManufacturingEfficiencyWageContractor
This paper draws on the qualitative and quantitative evidence from a dataset generated from a survey of 499 households in Ghana to explore the implications of access to microfinance for the gender asset gaps. Two sets of statistical analysis are undertaken. The first is a cross-sectional regression analysis that examines the importance of microfinance for intra-household gender wealth inequality. The second uses the Oaxaca-Blinder decomposition method to examine the gaps in wealth between female-headed and male-headed households. The results show that higher access to microfinance is associated with lower gender asset gaps within and across households. The evidence suggests that targeting credit to financially constrained households, and in particular to women, can contribute to reducing poverty and gender inequality.
International ownership positively impacts the social performance of social enterprises at the expense of financial performance. International owners mostly use their resources and controlling rights to improve social performance at the expense of financial performance. Current ownership theories do not address how the multidimensional utility function might affect the governance and financing of a social enterprise. There is a need to develop theories for firms with conflicting objectives.
The main objective of this paper is to investigate the effects of microfinance on women’s entrepreneurship and empowerment, using national household data from Tunisia. We have employed Logistic Regressions and Fuzzy-set qualitative comparative analysis (fsQCA) to study the consequences of microfinance use.We find positive and significant effects of access to credit on women’s work, attitudes toward income increase, execution of the micro-projects, and schooling attendance. The results confirm the potential of micro-finance in women’s empowerment and Entrepreneurship Development in Tunisia, especially during COVID-19 pandemic.
What are the significant factors motivating Muslim women to become mompreneurs in Muslim-dominant countries? Sakai answers this question by analysing the subregional trend in Muslim-dominant regions of the Gulf countries, South Asia and Southeast Asia. This chapter examines commonly identified influences on Muslim women’s choices about work participation, education policy, state economic policies and Islam. This chapter shows that the increasing interest that middle-class Muslim women are showing in entrepreneurship is a result of a diverse range of factors arising from specific local contexts, with Indonesia leading this field. This chapter proposes that female entrepreneurship in Muslim-dominant countries grows when it is supported by state policies, existing entrepreneurial tradition and gender norms. Women who engage in entrepreneurial activities are supported by key stakeholders.KeywordsBangladeshEducationEmpowermentEntrepreneurshipIndonesiaMalaysiaSaudi ArabiaSocial policyWomen
Purpose:
This paper aims to examine how selected
characteristics indicators impact on performance
measures of outreach and profitability in microfinance
institutions (MFIs).
Design/ Methodology/ Approach:
The study is an exploratory nature. The data is
taken from 42 microfinance institutions. A panel data
technique is employed as the key analytical framework.
Findings:
It is shown that the characteristics play a critical role in
the performance of MFIs. Find that size and number of
offices has positive impact on microfinance institution.
Research limitation/ Implications:
Data availability and accessibility is a limitation.
Microfinance institutions in India do not provide their
annual report on regular basis.
Originality/ Value:
Society may get the benefits because outreach level
will increase and poor people access to credit and their
standard of living will increase.
This paper uses cross-country and panel data set to test the significance of microfinance
on income inequality reduction at the macro level for a sample of 57 developing
countries for the periods 2000–2006 and 2007–2013. This study adopts panel
data methodologies, such as ordinary least square (OLS), pooled ordinary least square
(POLS) and instrumental variables (IV) estimations to overcome the endogeneity
problems among the variables. Empirical results show that countries with higher MFIs’
gross loan portfolio per capita tend to have lower income inequality, which confirm
the beneficial outcome of microfinance in reducing inequality at the macro level.
Moreover, our results suggest that microfinance loans can lead to improve the relative
income position of the poor in developing countries, albeit slowly. Our findings have
relevant recommendations to policymakers, as they could generate suitable strategies
to consider microfinance institutions as a more popular tool for fighting against both
poverty and inequality.
This paper examines the role of microfinance in alleviating poverty within the framework of the Grameen Bank of Bangladesh. By considering the definition of poverty given by the Grameen Bank, this paper specifically investigates the impact of microfinance on poverty alleviation. A survey that includes two separately selected samples was conducted among the respondents. The first sample was drawn from the members of the Grameen Bank and it constituted the treatment group. The second sample which constituted the control group was drawn from the households, who were not served by any microfinance institutions although they were eligible. Independent sample tests have been carried out by comparing the treatment and the control groups to observe the impact of microfinance on poverty alleviation. The results show that microfinance helps to alleviate poverty by addressing the factors that cause poverty. This implies that microfinance is an important factor for poverty alleviation.
Existing evidence shows that programs that provide grants to productive assets along with training to very poor women increase labor supply, earnings, and consumption. In contrast, evidence on the effect of microcredit on these outcomes is mixed. In this paper, we examine the effect of a hybrid of the two approaches—credit and grant—on the livelihoods of the ultra‐poor in Bangladesh. A randomized evaluation of the hybrid intervention shows that it increases labor supply of working‐age women, household income, productive assets, savings, and consumption expenditures. The benefit–cost ratio of the intervention is estimated to be 8.47.
El marketing financiero, impulsado por los organismos financieros internacionales, sostiene que existe una relación positiva entre microcrédito e inclusión financiera, beneficiando a los usuarios (mujeres) financieros. Sin embargo, mediante el análisis estadístico descriptivo y cualitativo se concluye que: el alto costo del financiamiento y el nivel de riesgo de los prestamistas generan impactos negativos en la economía. El objetivo es explicar las consecuencias de la inclusión financiera mediante el microcrédito que es impulsado mediante el marketing financiero. La relevancia de este trabajo se centra en un estudio mixto (micro y macro) los cuales exponen que la industria genera efectos contrarios a los planteados por sus promotores. Su aporte evidencia las principales consecuencias del microcrédito como son el financiamiento tipo ponzi y la apropiación del ingreso de las mujeres por parte de las instituciones.
Agricultural Cooperatives (ACs) enable rural households to fight against poverty. ACs provide credit and non-credit support services to improve household welfare. However, the results of AC effects on household welfare are mixed. This study contributes to the growing literature by investigating the effects of AC credit and non-credit support services on rural Thai household welfare using the Endogenous Switching Regression and Endogenous Switching Probit models. Data was collected in 2017 using a household survey. A two-stage stratified sampling technique was employed to obtain the study sample from rural Thai households. The result shows that AC services play important roles in improving household welfare. Both AC credit and marketing services exhibit significant, positive effects on household and farm income. AC marketing services are more effective in improving household welfare compared to AC credit. However, only AC credit considerably increases household consumption and the adoption of improved farm technologies and practices. Interestingly, AC credit and marketing services do not improve children's education in terms of educational expenditure and school enrolment rates.
Economic growth in developing countries provides an opportunity to
accelerate progress towards the UN Sustainable Development Goals
(SDGs), especially on a slight decline in inequality. However, in reality, the
number of people living in extreme poverty remains unacceptably high.
Utilising the experiences of 34 developing countries for the period 2009 to
2016, the role of microfinance on poverty in these countries is examined.
The results imply that the degree to which the existing forms of
microfinance effectively reduce extreme poverty is less workable in developing
countries, particularly when the hardcore poor are likely being
deprived of receiving access to microfinance. It is suggested that governments
may need to revise the structure and strategy of microfinance to be
more hardcore poor oriented. The hardcore poor have needs beyond pure
monetary assistance. A more hand-holding type of assistances are needed
as most are also poor in respect of literacy, assets, and skills.
Microfinance is a banking market in which operating costs are high while non-performing loans (NPLs) rates are low. While the existing literature tends to explain that the high operating costs arise from the provision of small loans, we argue that excessive efforts to control loan losses can also be a contributing factor. Therefore, this paper investigates the relationship between NPLs and the cost efficiency of microfinance institutions (MFIs). Using a unique global sample of rated MFIs and applying stochastic frontier analysis together with Granger-causality test and generalized method of moments (GMM), we find, in contrast to positive linear relationship evidence in commercial banking studies, a nonlinear (U-shape) relationship between operating costs and NPLs. This implies that MFIs need to balance their cost efficiency with asset quality.
Sometimes in developing countries there arises the tendency for the true fundamentals of credit provision to be overlooked, in pursuit of the orthodoxy. In this regard, a functional conceptualization of microcredit is considered crucial. Hence in this study, microcredit concept is considered critical to the understanding of the importance of credit delivery in the formulation and implementation of strategies for accelerating the pace of economic growth and sustainable national development. Invariably, the general objective of the study was to examine the microcredit alternatives for sustainable national development, with a focus on the political economy of Nigeria. Thus, the specific objectives were to (i) highlight the prevailing concept of microcredit in the political economy of Nigeria (ii) examine the contribution of prevailing microcredit practice in Nigeria, to sustainable national development and (iii) recommend how microcredit administration can be utilized in accelerating the pace of development in Nigeria. The study adopted as methodology, the critical mode of research and utilized as theoretical framework, the political economy approach. Findings of the study indicate that the prevailing concept of microcredit in the political economy of Nigeria, centers on poverty alleviation. However, the prevailing microcredit practice has not produced evidence of overt poverty reduction. An alternative form of microcredit recommended by the study is the type that its packaging guarantees full credit recovery. The second alternative conceptualization in the study is that microcredit is principally for the generation of multiplier effects in the economy, not singly for the fighting of poverty. In conclusion the study posits that the current fixation with microcredit as the supreme poverty alleviation methodology in Nigeria requires urgent rejection.
Para las personas que carecen de educación financiera es complicado iniciar un negocio. Por no tener acceso a la banca comercial, para conseguir financiamiento recurren a los amigos, familiares y prestamistas. Actualmente, las microfinanzas suplen estas formas de obtención de dinero y este impulso económico hace que, especialmente las mujeres, puedan invertir, permitiéndoles atenuar los gastos en sus hogares. Este tipo de microfinanciamiento está impactando económicamente a las comunidades rurales; los resultados indican que se han conformado grupos de mujeres emprendedoras, generando un aumento importante en la economía del lugar. El propósito del estudio, de tipo cuantitativo y descriptivo, es identificar las características de quienes solicitan microcréditos; esto en una muestra de 50 emprendedores. Los datos obtenidos revelan que, en 2016, se destinó un promedio de 50.000 micropréstamos en la costa de Chiapas, de ellos el 70 % se destina como capital de trabajo, y el 30 % restante como activo fijo.
This paper addresses the empirical question of whether microfinance has any impact on income inequality at the macrolevel. Very little research has been conducted on the relationship between the macrolevel scale of microfi-nance and income inequality over time in a country and across countries. Based on panel-data techniques, with annual data from 85 countries from 2001 to 2012 and a broad theoretical framework on microfinance and inequality , we provide empirical evidence that suggests that increases in the macrolevel scale of microcredit in a country contribute to reducing income inequality within that country over time. Finally, since microfinance may be endogenous, we used instruments from the existing literature to control for this problem.
The efforts of microfinance institutions to improve financial profitability and attract funding from the market may not necessarily conflict with the outreach objective of empowering the poor. In fact, a better-managed financially sound institution may promise a more sustainable effort toward outreach falsifying the occurrence of the trade-off between outreach and financial profitability. The study analyzes the trends in financial indicators reflecting portfolio risk, financial efficiency, productivity and outreach for microfinance institutions in India. The objective of the study is to verify the association between financial performance and outreach. The MIX market data on 46 microfinance institutions for 2005–2014 are used for the analysis. The panel data method with fixed effect model is applied to adjust for the heterogeneity within the sector. The present study finds no evidence of the trade-off between efficiency and outreach objectives in India. The results of the study are important for the investors and policy makers as it provides evidence that increasing outreach will not adversely affect the financial health of the microfinance institutions if they are operationally efficient and productive. The present study draws attention to the fact that the character of MFIs is shifting from unprofessionally managed naïve institutions run by people for the benefit of the people. Most of the MFIs today are professionally run, investor-friendly, profit conscious, or rather profit-driven organizations. This character shift calls for reconsidering the system costs of various subsidies and concessional refinance given to these institutions on a blanket basis.
The goal of this paper is to provide empirical evidence to determine whether microfinance, measured through a country's gross loan portfolio per capita, has a heterogeneous effect on poverty reduction among countries with different levels of poverty. We have used a panel-data quantile regression with a data set for 57 countries for the years 2005, 2008, and 2011 to estimate the distributional impacts of microcredits on two poverty indices. Results reveal not only that microfinance significantly reduces the incidence and depth of poverty, but also that this effect differs across the different poverty levels (quantiles). The effect of microcredit on poverty reduction is slightly larger among countries where the incidence and depth of poverty are the highest, suggesting that microcredit reaches and benefits even the poorest individuals.
National programs create materials for and interest in health and development, but the benefits of such programs are not equally distributed across geographic territories or across sub-populations. The poor, minorities, women
and those living in rural areas tend to receive fewer benefits and experience large differentials in terms of overall development and health outcomes. Non-governmental organizations
, civil society, and parastatal organizations can address the gaps in services and resources. They do this through small-scale enterprises and locally-based investment in individuals and households. One such community-based program is the Grameen Bank
, an NGO that provides microcredit
to poor, rural, women. It has been successful in raising household income
and improving human capital in Bangladesh
, but it has had mixed results in terms of scaling up for broader-scale poverty alleviation
and social impact. Gonoshasthaya Kendra
is an NGO that provides community-based health care
in Bangladesh using allopathic and traditional means. It has been successful in reducing maternal mortality
in the regions it serves by understanding and using resources at the local level. Although this NGO provides evidence that community-based health programs can be successful in delivering appropriate and acceptable health care to select communities, difficulty remains in scaling to national levels. A final example of community development is found in the Millennium Villages
Project which addresses multi-faceted poverty through coordinated efforts by local, national and international actors to address development across economic, health and social sectors. The Project proved successful in improving livelihoods and health at the community level but has yet to prove either scalable or sustainable.
In this chapter the author portrays the research problem addressed in this book, against the larger canvas of microfinance literature. The existing debates in literature, pertaining to the challenges and issues associated with the sustainability of microfinance institutions (MFIs), are surveyed in detail in this chapter. Based on the inferences drawn from this review, the author identifies the relevant research gaps in microfinance literature. The research objectives formulated to address these gaps are revisited in this chapter, in the light of its associated literature. Thus by undertaking this review process, the author explains ‘what we know’ and ‘what we probably are yet to know’ about the sustainability of Indian MFIs. This enables the author to discuss the relevance of the phenomenon under study and the rationale for conducting this research. The author concludes this chapter by enumerating the value additions that this research is expected to bring to Indian microfinance literature.
This study investigates the relationship between relational capabilities and balanced scorecard in
the Nigeria manufacturing firms. A survey research method was used to generate data from
employees working in various manufacturing firms in Nigeria. Simple and systematic sampling
techniques were used to generate data from employees working in various Nigeria manufacturing
firms. Responses from survey were statistically analysed using descriptive statistics, product
moment correlation, and regression analysis with statistical package for social sciences (SPSS
V.20). The results of the study confirms that a statistical significant relationship exist between
relational capabilities and balanced scorecard in the Nigeria manufacturing firms. Thus, we
suggest that firms should develop a good business relationship with their customers, develop good
motivational skills and generally increase firm’s performance.
p>In order to alleviate poverty and improve the living standard of the people of South-West Nigeria, it is imperative that micro/small financial services such as credit, insurance, money transfer, etc. are provided in order to engage them actively in productive activities. Globally, there are several failed policies by governments, particularly in Nigeria over the years aimed at poverty alleviation. This study examines microfinance scheme towards the dispersion of credit amongst the working poor; draws from the data collected from field survey and these were reported using tables, frequency counts and cross-tabulations to draw inferences and a loan demand model was specified and estimated using the Ordinary Least Squares (OLS) econometric technique.The study used cross-sectional data collected from selected respondents in selected areas of both the Lagos and Ogun States of Nigeria respectively. The study found that majority of the Microfinance banks in Nigeria are model after the Grameen Bank which is aimed at the poor and people with basic, little or no education and that loan demand is interest rate insensitive. Therefore, MFIs should design appropriate products that are flexible enough to meet the different needs of the poor for both production and consumption purposes. Besides, governments (local, state and Federal) should urgently tackle the infrastructural gaps such as electricity, water and efficient transportation system which impact greatly on the standard of living of the people .
Int. J. Soc. Sc. Manage. Vol. 3, Issue-4: 256-266</p
Microfinance institutions (MFIs) have the dual objective of providing social welfare and financial stability. We evaluated the financial efficiency of MFIs in sub-Saharan African countries by comparing their regional performances during the period 2004–2013. We addressed prevailing MFI heterogeneity by using the concept of ‘metafrontier’. The results showed that on an average, more than half the MFIs showed a drop in productivity. The measure of how much one country gets closer to or further away from world frontier technology is commonly known as the TGC score. In world frontier technology, East and South Asian countries have taken the lead (TGC score 1.0048) while sub-Saharan African countries lag behind (TGC score 1.0020). Most East and South Asian countries have a TGC score of 1, and most sub-Saharan African countries have a TGC score less than 1. This signifies that Asian countries lead world frontier technology and most African countries do not. The decomposition of efficiency scores showed that with regard to technical changes, African nations had progressed on average only 0.01%, and efficiency change scores had regressed by 0.59% annually.
Significance:
• First efficiency study on microfinance institutions and their heterogeneity in Africa.
• The results show robust discrimination among the efficiency scores.
This study assessed and compared the perceptions of the male and female heads of agribusiness households about the influence of credit use (from 2005 to 2007) on their; (i) Households resource allocation, and (ii) Participation in agribusiness services. These were taken as proxies for the households' economic and social empowerment respectively. Four towns (2 urban and 2 rural) were purposively selected based on the existence of both formal and informal micro/agricultural loan sources. Data were collected using a set of questionnaire from 120 respondents (84 male heads of the households and 36 female heads of the target households) and a focus group discussion. These were supplemented with literature. Data analysis was done using descriptive statistics, including five point Likert scales. To accomplish the gender comparison of credit impact, a non-parametric inferential (Mann Whitney U test) was adopted. The results showed that credit use had led to empowerment of both households. It also proved that there were significant gender differences in the effect of credit use on households' expenditure on food, medicals, school fees, household assets and building.
National level programs create materials for and interest in health and development, but the benefits of such programs are not equally distributed across geographic territories or across sub-populations. The poor, minorities, women and those living in rural areas tend to receive fewer benefits and experience large differentials in terms of overall development and health outcomes. Non-governmental organizations, civil society, and parastatal organizations can address the gaps in services and resources. They do this through small-scale enterprises and locally-based investment in individuals and households. One such community-based program is the Grameen Bank, an NGO that provides microcredit to poor, rural, women. It has been successful in raising household income and improving human capital in Bangladesh, but it has had mixed results in terms of up-scaling for broader scale poverty alleviation and social impact. Gonoshasthaya Kendra is an NGO that provides community-based health care in Bangladesh using allopathic and traditional means. It has been successful in reducing maternal mortality in the regions it serves by understanding and using resources at the local level. Although this NGO provides evidence that community-based health programs can be successful in delivering appropriate and acceptable health care to select communities, difficulty remains in scaling up to national levels.
The Indian Tamil plantation workers of Sri Lanka were originally brought to Sri Lanka during the 19th century by the British colonial masters to work as labourers in the newly opened plantations. Compared to the rest of the female population in Sri Lanka, this group seems to have a lower physical quality of life. It is argued in this chapter that this group has been by-passed by the state-sponsored welfare schemes for reasons which are both historical and political. It is argued that although employment is high in the plantation sector, since the overwhelming majority of the women are labourers who receive relatively low wages, their standard of living is also relatively low. It is also the contention that the partriarchal cultural norms that pervade that particular society have led to an implicit subordination of women which has given them reduced access to basic needs. -from Author
Waterselling by the landless is a concept that aims to empower the poor through facilitating their access to a crucial rural resource. Thus it is not merely an income-generating activity but also an attempt at agrarian reform. This book presents the experience of an experimental program in which over 150 small groups of landless water sellers worked in association with Proshika, a Bangladeshi non-governmental organization (NGO), to establish an irrigation service. Chapter 1 outlines the project in operation; the subsequent chapters examine its specific aspects in greater depth. Chapter 2 considers the initial criticisms the program encountered, summarizes the early experience that refuted or validated these criticisms and describes the research design and the constraints upon it. Chapters 3 and 4 look at the relationships between the landless and other social classes in Bangladesh and discuss the effects on these relationships of an alteration in status from landless peasant to co-operative entrepreneur. Chapter 5 deals with the question of whether the program improved the smaller farmers' access to irrigation services. Chapters 6 and 7 analyze the financial, economic and technical performance of the project. Chapter 9 surveys its effects on employment. Finally, chapters 9 and 10 provide an in-depth summary of what has been learned from the experience of the project and suggest its implications for the future, not only for the landless in Bangladesh but also for the rural poor, and organizations existing to assist them, in other Third World countries. -Authors