Despite the growing body of literatures about the microfinance and its impact on poverty, there are counter growing criticisms against microfinance in issues such as reaching the poor, unchanged poverty level, high interest rate, brutality in repayment processes, financial sustainability, and women empowerment. (Hossain, 2010).
In terms of poverty reduction and reaching the poor people, the studies edited by (Hulme & Mosley, 1996) on the impact of microfinance on poverty found that poor people do not benefit from microfinance; it is only non-poor people who do well with microfinance and achieve positive impacts. (Morduch & Haley , 2002) points out that studies that have been conducted to examine the microfinance targeting and impact illustrate that MFIs show considerable diversity in their ability to reach poor people and the MFIs that have excellent financial performance do not imply excellence in outreach to poor people. However, (Odell, 2010) thinks it’s impossible to answer the question, does the microfinance work? (Odell, 2010) argues that the microfinance is a collection of tools and there are different types of MFIs, clients, and offered services .MFIs work in different environments, in different countries and it’s not correct to generalize the findings of a single impact study on the microfinance on the world. In addition, the measurement of microfinance impact is surprisingly difficult, because it’s not easy to isolate the impact of microfinance from other factors (CGAP). Fore instance, if the clients who got microfinance services are not doing better in their business than those who didn’t, this not means this caused by the microfinance services. There are other factors that could be involved in this impact such as the ...
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... and in the term of physical mobility, ownership and control of productive assets, and their status within the community. A second viewpoint believes that microfinance do little to women empowerment and may contribute to reinforcing existing gender imbalances. (Cheston& Kuhn, 2002) conclude that empowerment is a complex process and MFIs microfinance is not always empowering for all women. MFIs need to improve their services and processes to ensure that they support the empowerment of women.
Critique and criticism against microfinance extended to argue many other issues such as considered microfinance as a tool of economic globalization, or creation of technology dependency. Millions poor women and men in the world need access to microfinance.Hoewver; Microfinance is need to be review and evaluated objectively to improve its services and learn from its mistakes.
in the recent past, particularly in the context of reaching the poorest families in a more effective way. The word microfinance is being used very often in development vocabulary today. Although the word is literally comprised of two words: micro and finance which literally mean small credit; the concept of microfinance goes beyond the provision of small credit to the poor. Christen (1997) defines microfinance as 'the means of providing a variety of financial services to the poor based on market-driven
Micro Penetration Index (MPI) and Micro Poverty Penetration Index (MPPI) The two indices penetration of microfinance (MPI) and Intensity of penetration of microfinance among poor (MPPI) have been presented in the 2009 report for the first time. The calculation of the index has been carried out as follows: • The number of credit of MFIs and members of SHGs with outstanding loans to banks are computed and each state’s share to the country’s total micro finance clients has been worked out. • The intensity
Poverty defines the state of not being able to afford basic needs such as food, clothing and shelter to ensure a sustainable livelihood. (Irish Government,1997) In this essay, we will be addressing the alleviation of Poverty, which is a multidimensional phenomenon with a variety of causes, effects and approaches. Thus, considerations from different aspects are necessary in order for effective alleviation to happen. Despite more than half of global poverty rates being cut down since 1990, one in
loans to finance their projects. Micro credit or small amounts of money exist as small loans given to entrepreneurs looking to empower themselves. The Grameen Bank innovation provided to people willing to help themselves. Muhammad Yunus, winner of the Nobel Peace Prize, invented the idea for the Grameen Bank. Yunus believes that “small loans can produce big dream” and that “micro finance has that ability to change the world.” Microfinance appears as an effective solution to reduce poverty. It can
Introduction Poverty is the main problem of everywhere. For the last thee decades several developing and developed countries taken several steps to alleviate the poverty. In the world %??(how much %) people are living life below the poverty line their daily or monthly income is less than $ xxx(how much) . One main step is the establishment of Microfinance Institutions which are providing micro credits to the poor people without any collateral. The performance of these institutions is very attractive
As found by Hartangi (2007) that success of Micro finance depends upon the practices of that specific bank, which finance poor people, by quoting and example of BRI (Bank Rakyat, Indonesia) researcher says that they provide technical and moral support to the people they lend money, and make sure they do good, they also choose different collaterals like motorcycle, cars, cattle, and land etc to secure their loan yet making collateral stronger incase the client fails to repay and credits interesting
There are high levels of poverty in South Africa. Meaning that in some sectors of society there is very little money to spend on goods and services which is why poverty is a condition of having little or no money or goods. Poverty leads to many issues such as crime and a lack of education and skills. Poverty can have a number of effects on South African businesses and most importantly on education. Education is a form of learning in which the knowledge, skills and habits of a group of people are
in SME’s; they started out as SMEs before experiencing expansion. This implies that today SME’s are tomorrow’s large corporations. Therefore, SMEs need to be nurtured to ensure their growth and to make sure that they succeed in making the desirable impact of promoting and sustaining economic growth and development in Ghana. Moreover, SME’s are generally seen to be the gem for indigenous entrepreneurship and generate many small investments, which otherwise would not have taken place. Therefore, Ghana
to help individuals who are in need of assistance to make a financial behavior change and to become educated about their money. As I defined financial social work I thought of all the different aspect of how a client could use help to better their finances such as, being educated, being motivated to change and having the support that they need to make this decision. The client has to be able to want to take
‘win-win’ solution, where both financial institutions and poor clients profit” (Morduch, 1999). Critically assess this statement with reference to the empirical literature. Introduction Microfinance has achieved growing significance as a tool for poverty alleviation with the year 2005 marked as the United Nations International Year of Microcredit. Over the years, the world has witnessed a remarkable growth in the number of institutions offering microfinance and the number of clients reached. Figures
families below the poverty line. However if necessary, a maximum of 20% and in exceptional cases, where essentially required, unto a maximum of 30% of the members in a group may be taken from families marginally above the poverty line living contiguously with below poverty line families. This will help the families of occupational groups like agricultural labourers, marginal farmers and artisans marginally above the poverty line or who may have been excluded fro the below poverty line lit to become
and human development services to break the so called cycle of poverty. According to the Hutchinson Encyclopedia: “the cycle of poverty is the set of factors or events by which poverty, once started, is likely to continue unless there is outside intervention”; a huge problem that affects developing countries in Latin America and to help solve this situation is why Pro Mujer came to existence. From a pioneering experiment in micro-lending, Pro Mujer has become one of the leading women’s development
resources, the global oil crisis which began in 1999 has helped its energy companies increase their outputs and profits. The nation is a home of abundant natural resources that include iron ore, nickel, copper, zinc, gold, lead, silver, timber, fish, coal, petroleum, natural gas, and hydropower. Regionally, the Canadian economy varies greatly. In the Eastern provinces, marine industries—including fishing, telecommunications, and energy production—are the main components of the economy. In the French-speaking
the stronger free market economy of today. The World Bank impacted political developments during the 20th century. For example, after the fall of communism in Romania the World Bank revived its relations with Romania by approving two loans to help finance Romania’s new government. Later the new government created new programs and reforms to free up prices and set up the basic laws and regulations required for a free market economy. This impacted the country in many ways since the price hikes were way
technologies. It helps smooth consumption by providing working capital and reduces poverty in the process. Both formal and informal lenders are active in rural credit market (Adams Fitchett 1992; Aleem 1990; Ghate 1992; Hussain and Demaine 1992). Collateral-free lending, proximity, timely delivery and flexibility in loan transactions are some of the attractive features of informal credit. Unlike formal finance, informal finance may not be as conducive to development because: (i) it is expensive, (ii) it