Microfinance is the business of giving small, collateral-free loans to poor borrowers that are paid back in frequent intervals with interest. While these for-profit microfinance institutions (MFIs) ...promise social and economic empowerment, they have mainly succeeded at enfolding the poor—especially women—into the vast circuits of global finance. Financializing Poverty ethnographically examines how the emergence of MFIs has allowed financial institutions in the city of Kolkata, India, to capitalize on the poverty of its residents. This book reveals how MFIs have restructured debt relationships in new ways. On the one hand, they have opened access to new streams of credit. However, as the network of finance increasingly incorporates the poor, the "inclusive" dimensions of microfinance are continuously met with rigid forms of credit risk management that reproduce the very inequality the loans are meant to alleviate. Moreover, despite being collateral-free loans, the use of life insurance to manage the high mortality rates of poor borrowers has led to the collateralization of life itself. Thus the newfound ability of the poor to use MFI loans has entrapped them in a system dependent not only on their circulation of capital, but on the poverty that threatens their lives.
Social enterprises in the microfinance industry need to adhere to both financial and social demands. Critics argue that there is a mission drift away from the social mission, and this has motivated ...the introduction of social rating agencies to strengthen the business ethics of microfinance institutions (MFIs). Using a global dataset of 204 socially rated MFIs from 58 countries, we assess the factors that drive the social performance ratings of MFIs. Overall our results show that social ratings of MFIs are significantly related to financial performance, greater outreach especially in rural areas, well-defined social objectives, staff commitment, service quality and an enhanced customer service. We observe that various rating agencies attach different importance to each of the social indicators. The public policy implication is that social rating agencies need to become more transparent, to reduce the information asymmetries between heterogenous socially motivated investors and the focal MFI.
This article grapples with the causes of India’s microfinance crisis. By contrasting Bangladesh’s highly successful Grameen model with the allegedly “universalizable” version of India’s SKS ...Microfinance (which precipitated the crisis), trust or social capital is isolated—not just narrowly interpreted within standard economic theory, but more broadly construed—as the essential element accounting for the early success of microfinance. It is argued that the microfinance experience has been widely misinterpreted, in both analytical and policy terms. This article suggests inherent limits in extending the model to for-profit institutions and, in particular, to the pace of scaling up.
Introduction: Sharia Microfinance Institutions in the form of Baitul Mal wa Tamwil (BMT) is a form of financial inclusion that plays an important role in the development of micro and small ...businesses. Its main activity is to raise member funds in the form of deposits and redistribute them in the form of microfinance. During the covid 19 era, almost all of its members were affected, causing operational disruptions. Purpose: This study aims to analyze the impact of covid 19 on BMT and members as well as the social assistance model carried out until December 2021. Methodology: Determination of the sample using porpusive sampling with respondents as many as 43 BMT spread across Sumatra, Java and Sulawesi. The three islands were chosen because they became the center of BMT's growth. The data collection method uses google form, while the data analysis uses qualitative descriptive analysis. Findings: The results of the analysis show that covid 19 has a direct impact on BMT's performance by an average of 8.4%, in the form of a decrease in financing installments, deposits and profits as well as an increase in non-performing financing. Although BMT's performance has decreased, its social role has increased in the form of social assistance, such as relaxation of financing, member education and facilitation of marketing of member products through social media, and the provision of basic social assistance.
The micro-credit programme was introduced with multi-dimensional objectives and therefore was always under direct purview of various government agencies. Microfinance in Odisha works under umbrella ...of Mission Shakti and TRIPTI (a world bank initiated project). Balasore district is selected on the basis of MFPI index taking into consideration the saving, credit linkage and credit-deposit ratio indicators. The analysis had shown positive impact of programme on various economic, social and decision making dimensions. The linked financial institutions have undertaken SHGs as their major customers and therefore positive impact on loan disbursement and recovery rate is observed.
This paper uses stochastic frontier analysis to examine whether there is a trade-off between outreach to the poor and efficiency of microfinance institutions (MFIs). We find convincing evidence that ...outreach is negatively related to efficiency of MFIs. More specifically, we find that MFIs that have a lower average loan balance (a measure of the depth of outreach) are also less efficient. Moreover, we find evidence showing that MFIs that have more women borrowers as clients (again a measure of the depth of outreach) are less efficient. These results remain robustly significant after having added a number of control variables.
This article examines the impact of microfinance 'plus' (i.e. coordinated combination of financial and nonfinancial services) on the performance of microfinance institutions (MFIs). Using a global ...data set of MFIs in 77 countries, we find that the provision of nonfinancial services does not harm nor improve MFIs' financial sustainability and efficiency. The results however suggest that the provision of social services is associated with improved loan quality and greater depth of outreach.
This study highlights the functions and structure of Self Help Groups (SHGs) by including many aspects like governance practices and management structure, financial management, financial and ...organizational sustainability. This paper covers 80 SHGs of Mewat District of Haryana state of India spread over 5 blocks in the district. The selected schemes for this purpose are MDA & SGSY. The study also recommended some steps to be taken by SHGs and implementing agencies for the welfare of SHGs and its members as well as for the better performance of the group. It includes promotion of literacy among members, regularities in meetings, proper monitoring, compulsory income generating activities, maintenance of books and registers and focus on qualitative terms than on quantity of groups.
Microfinance Mission Drift? Mersland, Roy; Strøm, R. Øystein
World development,
2010, 2010-1-00, 20100101, Letnik:
38, Številka:
1
Journal Article
Recenzirano
Odprti dostop
Claims have been made that microfinance institutions (MFIs) experience mission drift as they increasingly cater to customers who are better off than their original customers. We investigate mission ...drift using average loan size as a main proxy and the MFIs lending methodology, main market, and gender bias as further mission drift measures. We employ a large data set of rated, multi-country MFIs spanning 11 years, and perform panel data estimations with instruments. We find that the average loan size has not increased in the industry as a whole, nor is there a tendency toward more individual loans or a higher proportion of lending to urban costumers. Regressions show that an increase in average profit and average cost tends to increase average loan and the other drift measures. More focus should be given to cost efficiency in the MFI.
Abstract
Questions about the future of global microfinance, and specifically the future of policy and subsidy for microfinance, abounded even before the pandemic. Competing policy priorities and ...limited budgets mean key questions must be answered. How should funders and policy-makers approach subsidy to sustain or increase the reach of microfinance? How do policy-makers find a balance between consumer protection and minimizing the costs of regulation for providers who attempt to serve low-income (and often unprofitable) customers? Can technology be a solution to long-standing challenges, increasing reach and lowering costs? Insight into these questions can be gained from an unlikely place: the United States. For decades, global microfinance advocates have suggested the US has much to learn from the innovations and successes of the global microfinance movement. However, the financial system in the US is best understood not as the result of an absence of microfinance, but an example of how a financial system evolves, and the enduring challenges, even when it includes microfinance. Microfinance has been historically present in the United States, since at least Benjamin Franklin, and extending through the present. A clear-eyed and informed view of that history provides several important lessons, including the necessity for on-going subsidy, the never-ending challenge of consumer protection, the rising costs that can come with robust market competition, and the inability of technology to fix systemic challenges. Policy-makers and funders the world over can benefit from learning from each other, particularly if the conversations start from a different point: the challenges are shared and fruitful ideas and valuable lessons can come from all parties.
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