Got a tricky question? Receive an answer from students like you! Try us!

Microfinance Institutions - Essay Example

Only on StudentShare
Author : murphyvella


Microfinance institutions are relatively new developments in finance that emerged around the 1970s.Microfinance was an improvement of how donors and governments used to channel funds to the grassroots to help the poor in development projects…

Extract of sample
Microfinance Institutions

Between the 1950s and the 70s, governments and donors used to channel funds to the poor communities for development through rural credit programmes, with most of these funds being subsidised. The results were high loan default rates and high loses that made it impossible to reach the targeted rural poor households (Anyanwu, 2004). In the early 1980s, the history of microfinance institutions gained shape as more of these institutions sprouted in developing countries. The Grameen Bank was among the first pioneers to offer small loans and savings services to clients on a large scale with considerable profit margins. These banks did not have any subsidies, they had highly sustainable businesses and were not commercially funded; they also had a wide outreach in such rural areas (Robinson, 2001). The difference between these institutions and the credit programs rolled by governments in the 50s and 60s was that the new institutions had more emphasis on repayment of credits, charged some interests to cater for the costs of credit delivery and had more attention on customers in the informal sectors (Jegede, kehinde & Ahmed, 2011). In the early 1990s, there was increased growth of MFIs in the number of developed institutions initiated and outreach to more customers. ...
Download paper

Related Essays

Ethics in Microfinance. Microfinance for Bankers and Investors: Understanding the Opportunities of the Market at the Bottom of the Pyramid
Nonetheless, views as to what represents an excellent economy and how the economy of a budding nation could be enhanced and by foreigners as well, (Labie & Armendariz, p. 34) have altered frequently during the course of time. One of these alterations caused the materialization of microfinance. …
10 pages (2510 words)
Microfinance lending technologies and their impact on the sustainability of financial institutions: A comparative review of crit
Muhammed Yunus and the Grameen Bank, [Bangladesh]”. (Hasan, Hassan & Uddin, 2009, p. 318) Though primarily aims to provide finance to the poorer sections of the society, the people belonging to unorganized sector, especially self-employed or unsalaried without any collateral, the concept of microfinance is not limited to lending, and covers wide range of financial services needed for the development of the communities. The paper discusses about the corporate governance, the objectives microfinance institutions, theoretical background, critical success factors (CSF), future of MFIs per se and…
12 pages (3012 words)
Financial Markets and Institutions
Financial intermediaries have played a major role the development and growth of the world’s economy. The financial institutions such as banks and other financial institutions such as microfinance institutions, investment ventures, and Sacco’s provide funds for the development of businesses operations. The Financial intermediaries help investors to save to improve their living conditions. For example, finance institutions give loans to small enterprises and individuals who make take less risky loans but give high returns in terms of interest rates. These returns are used to provide loans…
6 pages (1506 words)
Micro Finance and Women Empowerment: A Socioeconomic Analysis in Sierra Leone
8 1.5. Research Questions… 9 1.6. Hypotheses…. 10 1.7. Significance of the study…. 10 2. Literature Review…. 13 2.1. Women Empowerment…. 13 2.2. Antecedents of Women’s Empowerment….….…. 12 2.3. Developmental models of microfinance … 20 2.4. Theoretical framework in earlier studies … 22 2.5. Conceptual Framework… 26 3. Methodology…. 29 3.1. Research philosophy … 29 3.2. Research Design… 30 3.3. Analytical tools…. 31 3.4. Description of variables… 34 3.5. Reliability and Validity …. 35 3.6. Data source…. 39 4.
8 pages (2008 words)
The Federal Reserve
As compared to the employment, the self employed or an entrepreneur in general, have to invest some amount, which is said capital, and it is the fate of the self employed that it may succeed or fail, whereas in the employment there is no risk for the investment, as there is no investment required, all the employee has just to do is to fulfill the job requirement and to get a an earning at fixed rate. The amount to be invested in business has risk, as above mentioned, but the business has too much attraction, because it has good returns, and if comparable by the employment, the investor may…
5 pages (1255 words)
Impact of Microfinance on Developing Countries
With no access to financial systems, the poor have to define new informal ways through which they have to guarantee their financial survival while at the same time obtaining seed capital for development. Such informal community based institutions are meant to meet their daily and long-term financial needs, a gap that is perfectly filled by the micro financial institutions (Jegede, Kehinde & Hamed, 2011). Consequently, micro financial institutions are organizations developed towards promoting economic activities among the poor and low-income earners, where formal financial institutions have not…
9 pages (2259 words)
Microfinance - how government regulations affect microfinance in Brazil
The governments of the nations have a crucial role to play from the regulatory and financing points of view. A lot of measures are required to make this form of financing a sustainable one. This requires the scope of the microfinance schemes to be further widened. There are several challenges that the governments of the countries opting for these kinds of schemes face. There is lack of mobility in the credit and a lot of reliance on the government as the source of the funds. The competitive environment of the microfinance sector is a lot biased towards the public sector organisations.…
8 pages (2008 words)