TOWARDS AN INTEGRATED APPROACH TO MICROFINANCE

International journal of Emerging Trends in Science and Technology, 2017

Abstract Since people with low incomes do not have access to financial institutions, and in most developing countries only public workers benefit from the services of public banks, the poor and private workers with low incomes cannot borrow from these public banks. Hence, microfinance institutions (MFIs) have become the answer to those who cannot benefit from the financial services of the public banks. The primary objective of this article is to present issues to concerned body to look on the problem which is the shifting goal of micro finance from financial sustainability to social sustainability.On my topic which is entitled the shifting goal of micro finance from social sustainability to financial sustainability, I have tried to summarize different literature and make an argument on the two contradicting ideas. Tracing the goal of microfinance I conclude that the microfinance objective has to be kept as to provide social and financial service for the poor and marginalized group. But the concern of scholars and the institution on financial sustainability of micro finance which should not be underestimated problem has to be solved. Unless otherwise the microfinance institution has to be merged with banks Shifting of the goal of microfinance from social sustainability to financial sustainability is the missing link. The scholars and the financial institutions against my idea have to answer the question of what is the reason for the existence of micro finance. Finally I recommend as strengthening the microfinance social service such as training and development on entrepreneurial skill, leader ship skill, marketing skill and others which in turn proof financial performance. Keywords: Microfinance, Social performance, financial performance, entrepreneurial development, financial institution, banks, microcredit, saving, micro insurance, loan

Microfinance 3.0, 2013

ABSTRACT Microfinance, since its’ formal discovery in the 1970s, has received global recommendation for its’ invaluable contribution towards poverty alleviation and financial inclusion. This research paper seeks to find out if Contemporary Microfinance Institutions (CMFIs) and their beneficiaries can achieve self-financial sustainability when weaned off assistance. The research uncovered that all CMFIs have self-financial sustainability motive, however the few that have achieved this goal or shown a clear path of attaining it, are regulated and have been noted of applying good financial management practices (cost efficient services) and best operational methodologies; they have appropriate interest rate above that of the conventional banks and flexible terms of repayment, exclusive products for the poor, institutional control systems, good risk management systems, human resource and client’s capacity building and group lending (Sara, EK 2011). Findings on the beneficiaries’ financial sustainability revealed mixed reactions; whereas some beneficiaries shown clear signs of financial sustainability when weaned off credit, others were worse off after receiving MFIs credit or indicated consistent dependency on credit. However it was clear that those who attained or have shown signs of financial sustainability were operating with regulated MFIs whereas the later either misappropriated the credit or were operating with unregulated MFIs.

2002

The initial success of microfinance programs in the 1970s led pioneers to think that many essential problems of the poor might be resolved by access to credit alone -- the ability to acquire assets, to start businesses, to finance emergency needs and to insure against illness and disaster. Part of that vision has certainly been realized. But much remains to be done. Most microfinance institutions (MFIs) are still small and vulnerable to constraints on their resources and to the risks inherent in single-issue portfolios. Most depend upon donors and governments to remain in operation. There is much waste and duplication, and some mature programs have declining loan recovery rates, even as competition for borrowers rises from conventional banks and finance companies. Analyzing the failures of credit programs aimed at small farmers and the successes of other programs showed the need for new understanding of the ways that poor households make spending, borrowing, and saving decisions. Th...

Microfinance, since its' formal discovery in the 1970s, has received global recommendation for its' invaluable contribution towards poverty alleviation and financial inclusion. However, researches in the industry have generated debates on its' financial sustainability and the beneficiaries' financial and empowerment sustainability. This research paper explores relevant secondary literature on microfinance beneficiaries' financial sustainability and Microfinance Institutions' (MFIs) cost efficiency and financial sustainability. Analysis of data gathered from the literature review indicates that most beneficiaries of MFIs are relieved of poverty in the short term. They go back to the poverty bracket in the long run after they do not receive assistance/ support from the MFIs again (Wrenn, 2005 & Simanowitz, 2001). Which Wrenn, (2005) attributed to inappropriate poverty alleviation service design by most MFIs. However, successful MFIs were noted to have cost efficient services; they charge interest rates above the conventional banks to cover their operational cost and to increase credit or loan portfolio. On the financial sustainability of MFIs, the study uncovers that all contemporary financial MFIs have the motive of attaining self-financial sufficiency, however the few that have achieved this goal or shown a clear path of attaining it, have been noted of applying good financial management and operational practices. Among these best practices noted to have been associated with successful MFIs are operational cost-effectiveness, exclusive products design for the depth outreach,

Modern Corporate Governance Strategies for Sustainable Value Creation, 2024

The only financial sector where stakeholders may gain from both poverty alleviation and sustainability is microfinance. Microfinance practitioners argue that the absence of governance standards in microfinance institutions (MFIs) is the reason for this dual role. The focus will be on understanding how effective governance can enhance the performance and sustainability of MFIs, ensure accountability, and protect the interests of stakeholders, including borrowers, investors, and the community. The focus of this research is on data from a frontier market economy, and the research framework takes into account multiple theories, including three management-based theories (resource dependence, stakeholder, and stewardship) and the economic-based agency theory. The chapter will provide a blend of theoretical insights, practical examples, and case studies to offer a comprehensive understanding of the critical role governance plays in the microfinance sector. It was discovered that the profitability of MFI has a non-linear impact on its services for the impoverished, taking into account both "social-welfare and commercial logic." MFIs' outreach typically declines when they aim for large profits. Consequently, the study's conclusions recommend creating a governance handbook that prioritizes social welfare reasoning while increasing MFI services for clients who are less fortunate. It is also necessary to generate institutional structures and separate governance guideline, based on the social welfare logic. As part of their responsibility to ensure that the MFIs adhere to the social mission, the microfinance board of directors may designate a social director. These directors have been acting on behalf of the MFIs' clients.

Executive Overview Microfinance is an emerging phenomenon that opens access to capital for individuals previously shut out from financial services. In its direct engagement with the poor, microfinance represents a new way for financial capital to potentially stimulate economic growth in developing countries. However, microfinance is poorly understood, and it remains unclear whether it delivers on its promises. The goal of this paper is to introduce the topic of microfinancing to a wider audience of management researchers and to identify opportunities for future research in this new and growing area.

International Journal of Research, 2018

The microfinance industry in Ghana started to grow but over the last few years it has declined sharply which has affected severely the lives of beneficiaries even though a study by Afrane (2002) had shown the economic, social and spiritual lives of the beneficiaries of microfinance in Ghana and South Africa . Access to financial services is very important for poor people because the poor is always living in the society . This research assesses the opinion of thirty –two microfinance professionals who served the poor with Microfinance products through questionnaire. In addition, the research uses secondary data through archival sources from Ghana Microfinance Network(GHAMFIN). The results indicate that all microfinance firms experienced high degree of risks before collapsing. This caused high level of absurd poverty of over 40% in Ghana. The promise of reaching the poor was the main reason some of the microfinance firms survived because the existing models show significance weakn...

Feminist Economics, 2009

Proceedings of the 3rd International Conference on Accounting, Management and Economics 2018 (ICAME 2018), 2019

Microfinance is a new financial instrument tool in the development of poverty alleviation and equity and or income generation of low-income people. Microfinance is function as a macro financial development stimulus that will ultimately affect national economic growth. The purpose of this research is to identify and map the problems of microfinance in microfinance institutions (MFIs) and the achievement of their performance so that they can be a stimulus for the development of microfinance businesses. The results of the identification and mapping of microfinance problems in these MFIs will result in a "new model of sustainable microfinance institutions". The sustainable microfinance model will have an impact on poverty alleviation solutions and income distribution. Sharia-based microfinance institutions (Bank Waqaf) show a better success rate of funding turnover than conventional microfinance institutions. Sharia-based microfinance institutions have superior SOPs and governance by instilling religious values and more rigorous and effective management performance.