Tag Archives: Microfinance

Microfinance and Performance of Micro and Small Enterprises; Does Training Has an Impact (Published)

Access to finance is considered as very important for gaining high performance of Micro and Small Enterprises (MSEs). Yet it has been observed that despite the availability of access to finance the performance of several MSEs is poor, which is a major hurdle in the growth rate of MSEs. The purpose of this study was to find the difference in certain performance indicators of MSEs who owners have been given training against those whose owners have never been given any kind of training. In order to conduct study survey research has been conducted and a sample of 384 MSEs was selected on simple random basis. The findings revealed that all the performance indicators including sales increase, income increase, assets increase, employment increase, and meeting household expenses have shown a significant difference among the two groups. The findings of the study are very important for the policy makers and the people who are involved in microfinance industry.

Keywords: Growth, Microfinance, Performance, Training, micro and small enterprises

Hindrances to Microfinancing: A Nigerian Case Study (Published)

Traditionally, commercial banks lend money to large, credit-worthy corporations and avoid doing business with small and medium enterprises due to the associated risks and costs. These small and medium enterprises depend on microfinance banks to obtain loans for their businesses, but for some reasons, some of these businesses do not approach microfinance banks for loans. This research investigates reasons why some businesses do not apply for loans from microfinance banks even though they need funds for the efficient running of their business. Results show that lack of collateral, ignorance of businesses about the existence of microfinance banks, and high interest rates are the main reasons that are hindering businesses in applying for loans from microfinance banks. Microfinance banks need to reach out to economically active poor businesses that cannot obtain loans from commercial banks or other financial institution.

Keywords: Business, Enterprise, Entrepreneur, Loans, Microfinance, Nigeria

Islamic Microfinance System and Poverty Alleviation (Published)

Islamic microfinance is a finance system that follows the teachings of Shariah laws; this is a financial system that does not attract interest and promotes the welfare of its members while following the ethical business practices. This is a concept that is fast gaining prominence as a means of alleviating poverty especially in developing countries. In this paper, it has been found out that Islamic finance plays an important role in social economic development of its members without charging interest on the members. Furthermore, Islamic finance offers different ethical instruments and schemes that can be used for the purposes of microfinance. In Islamic finance, investors are allowed to determine the nature of investments that are done using their money. This paper is therefore important in understanding the concept of Islamic finance in alleviating poverty. It can be very useful for banks and financial institutions who have Muslims as part of their client base.

Keywords: Islamic System, Microfinance, Poverty

Does Microfinance Improve the Standard of the Poor (Published)

Access to microfinance is expected to improve the standard of living of the poor that are economic active and microfinance clients by enabling them to increase their household income. This study examined the contributions of Microfinance institutions to poverty reduction in Southwest Nigeria, using both primary and secondary data collected from Microfinance institutions (MFIs) and randomly selected customers (micro, small and medium enterprises) of the same Institutions. The study adopted a multistage sampling technique. The data from the survey was used to analyze the impact of loan received on earnings using a loan-impact probability model. The study found that Microfinance is an effective poverty alleviation strategy as it reaches the target customers more effectively and helps to a large extent in improving their standard of living and social status and also impacts greatly on Customers’ savings habit and income generation. The study therefore recommended that MFIs should embark on funds mobilisation drive to be able to reach out to more viable customers for provision of financial services. It also recommended that there should be provision of incentives by government to sustain MFIs in order to further extend their services to the rural areas and capacity building of MFIs in Nigeria should be made mandatory so as to develop appropriate policies that will enhance sustainability and stability.

Keywords: Incentives, MSMEs., Microfinance, Microfinance Institutions (MFIs), Poverty

Organizational Culture, Industry Competition and Performance of Microfinance Institutions in Kenya (Published)

The objective of our study is to assess the influence of organizational culture and industry competition on performance of microfinance institutions in Kenya. The population of the study comprise microfinance institutions that are members of the Association of Microfinance Institutions (AMFI) in Kenya. We used descriptive cross-sectional survey design. We collected secondary data from annual industry performance reports by AMFI. Primary data were collected through structured questionnaire. We analyze data through Chi-square tests, factor analysis and regression analysis. Results of Cronbach’s alpha test confirm reliability of our measurement scales. Our results demonstrate that organizational culture has significant positive influence on performance when the latter is measured using subjective performance indicators. However, the relationship between organizational culture and financial performance is not statistically significant. The results also indicate that industry competition has significant, but moderate positive influence on firm performance. Our results do not confirm significant influence of interaction between organizational culture and industry competition on firm performance. Finally, our results show that the joint influence of organizational culture and industry competition on performance is statistically significant. Findings of the study have implications for theory and marketing practice. Our results support the resource based view and resource advantage theories of competition. The results imply that possession of strong organizational culture that enhances reconfiguration and deployment of organizational resources is a key success factor in the microfinance industry. Findings of the study also imply that industry competition is beneficial to firms within the industry. The findings inform our conclusion that organizational culture positively and strongly influence performance outcomes in the microfinance industry. However, the study is limited by the cross-sectional research design used.

Keywords: Industry Competition, Microfinance, Organizational Culture, Performance

Analysis of Poverty Status of Women Microfinance Loan Beneficiaries and Non- Loan Beneficiaries in Owerri, Imo State. (Published)

This study investigated the poverty status of women microfinance loan beneficiaries and non-loan beneficiaries in Owerri, Imo State. A representative sample was selected through a random sampling technique. The sample size was 151 (80 loan beneficiaries and 71 non- loan beneficiaries). Data for this study were collected with the aid of two sets of structured and pre-tested questionnaire administered to the loan beneficiaries and non-loan beneficiaries of the formal credit institutions in the State respectively. The results indicated that incidence of poverty was 22.68 for loan beneficiaries and 28.78 for non-loan beneficiaries; poverty gap was 6.31 for loan beneficiaries and 8.52 non-loan beneficiaries. The result of the t-test showed that poverty status of loan beneficiaries differed significantly from poverty status of non-loan beneficiaries as a result of the positive effect of microfinance lending policies. Microfinance banks should increase the funds disbursed to women as it will go a long way in poverty reduction.

Keywords: Microfinance, Poverty Status, Women

SOCIO-ECONOMIC DETERMINANTS OF ERITREA’S SAVINGS AND MICRO CREDIT PROGRAM LOAN REPAYMENT PERFORMANCE: A CASE OF THE DEKEMHARE SUZ-ZONE (Published)

The Savings and Micro Credit Program of Eritrea was established to provide financial services to the poor and lower income individuals to enhance their business activities and alleviate poverty level. The study analyzed the socio-economic factors that affect the institution’s loan repayment performance and a sample of 140 beneficiaries was fixed from the Dekemhare Sub-Zone using the Stratified Sampling technique. A structured questionnaire was used to collect the primary data and descriptive statistics and the probit model were employed to analyze the data. Results of the regression analysis revealed that the level of education, loan amount and loan category have insignificant effect on the probability of the SMCP loan repayment. On the other hand age, gender, type of business and credit experience are significant determinants where age and type of business have negative relationship and gender and credit experience have positive relationship with the loan repayment probability

Keywords: Eritrea, Loan Repayment Performance, Microcredit, Microfinance, Probit, Savings and Micro Credit Program

Demystifying Nonparticipation of the Rural Poor in MFIs in Bangladesh: An Empirical Evidence (Review Completed - Accepted)

The purpose of this study was to evaluate the factors affecting nonparticipation of the rural poor in MFIs in Bangladesh. To this aim, the study investigated the measurement and predictive structure of multiple components of attitudes (fear and preference), subjective norms (religious leaders, spouse and friends) and perceived behavioral control (PBC; resources, knowledge and illness) in the domain of microfinance and its nonparticipation. The study postulated eight factors from the microfinance literature which are modeled together in examining nonparticipation of the rural poor in MFIs in Bangladesh. Data were collected based on stratified random sampling procedure through face to face interview from the respondents of 280 nonparticipating rural poor from six major areas of Bangladesh. The Structural Equation Modeling (SEM) along with AMOS was employed in analyzing data. Among the eight variables only four variables such as fear of getting into risk of loan, individual preference of taking loan, insufficient resources and ill-health or vulnerability to crises were appeared statistically significant for influencing the poor villagers’ intention to participation in MFIs in rural arena. Besides, intention and all the three constructs of PBC were found statistically significant to directly influence the participation behavior of the rural poor in Bangladesh.

Keywords: Bangladesh, Barriers of participation, MFIs, Microfinance, Rural poor

MICROFINANCE IN THE ACHIEVEMENT OF MILLENIUM DEVELOPMENT GOALS: A CASE OF KOILOT DIVISION, NANDI COUNTY-KENYA (Review Completed - Accepted)

This paper underscores the view that the provision of micro financial services to low income earners remains a pivotal point in the realization of the millennium development goals; hence, it remains the cornerstone for societal socio-economic and political transformative development in Africa.

Microfinance is very important in; creating access to productive capital for the poor who together with human capital addressed through educational training enables people to move out of poverty. It helps very poor households meet basic needs and protect their economic welfare. Micro-finance empowers women by supporting their economic participation and promotes gender equity. However, there has been remarkable performance and significant improvement in the economic and living status of small scale business people and this can be attributed to the existence of the Financial Services Associations. The paper seeks to discuss challenges encountered by micro-financial providers when it comes to loan repayment and the general view of non members. The paper also proposes various strategies employed by the micro financial institutions before dispatching the applied loans by their clients.

This paper concludes that microfinance play a role in the eradication of poverty, promotion of education, improving health and empowering women of Koilot Division Nandi County-KENYA

 

Keywords: Development, Growth, MDGs, Microfinance

Microfinance In The Achievement Of Millenium Development Goals: A Case Of Koilot Division, Nandi County-Kenya (Published)

This paper underscores the view that the provision of micro financial services to low income earners remains a pivotal point in the realization of the millennium development goals; hence, it remains the cornerstone for societal socio-economic and political transformative development in Africa.

Microfinance is very important in; creating access to productive capital for the poor who together with human capital addressed through educational training enables people to move out of poverty. It helps very poor households meet basic needs and protect their economic welfare. Micro-finance empowers women by supporting their economic participation and promotes gender equity. However, there has been remarkable performance and significant improvement in the economic and living status of small scale business people and this can be attributed to the existence of the Financial Services Associations. The paper seeks to discuss challenges encountered by micro-financial providers when it comes to loan repayment and the general view of non members. The paper also proposes various strategies employed by the micro financial institutions before dispatching the applied loans by their clients.

This paper concludes that microfinance play a role in the eradication of poverty, promotion of education, improving health and empowering women of Koilot Division Nandi County-KENYA

 

Keywords: Development, Growth, MDGs, Microfinance

Microfinance and Its Impact on Poverty Alleviation in Nigeria: A Case Study of Some Selected Microfinance Banks in Edo State (Review Completed - Accepted)

This research examines the relationship microfinance and poverty alleviation in Nigeria, to understand the effectiveness of micro credit within the context of its current practice in Edo State in particular, and the nation as a whole as a tool for wealth creation and capital accumulation among the poverty stricken populace and low income earners. The study made use of primary data obtained through field survey from the selected microfinance banks in Edo State and utilized quantitative tools to analyze these data so as to bring out any existing relationship between microfinance and poverty alleviation. The results obtained showed that microfinance has the potential of alleviating poverty by ensuring wealth creation and its attendant self-sufficiency. From our result, about 70% of the sampled population agreed that there is a positive relationship between microfinance and improved standard of living of the recipients of these micro credits; 78% attested that they obtained some sort of credit from microfinance banks to set up their small scale businesses, without which it would be impossible to do so; about 67% said they have used loan collected to expand their business while 24% said they used the loan collected to invest on new technology for their business and the remaining 9% of the respondents obtained loans to facilitate the export of their products. Focus of microfinance programmes in poor communities for it to be meaningful; a massive educational drive on the importance of microfinance in fighting widespread poverty should be launched in the country; etc were some of the recommendations made in this study

Keywords: Capital Accumulation, Low Income Earners, Micro Credit, Microfinance, Poverty Alleviation, Wealth Creation

Microfinance (Mf) and Poverty Alleviation In Southwest Nigeria: Empirical Evidence (Review Completed - Accepted)

By inspection, observation and government records there are too many poor in SouthWest Nigeria who require micro/small financial services such as credit, insurance, money transfer etcetera in order to engage actively in productive activities and improve their standard of living. Paradoxically, governments across the world, particularly in Nigeria over the years, have not been able to adequately help the poor in spite of all the rhetorics and several failed poverty-alleviation projects. The objective study examines the roles of microfinance towards the dispersion of credit among the working poor and also helped to improve the standard of living in Nigeria. The study draws from the data collected from the field survey and these were reported using tables, frequency counts and cross-tabulations to draw inferences. In addition, 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 confirmed that most of the Microfinance banks in Nigeria are tailored after the Grameen Bank which focuses on the poor and people with basic, little or no education and that loan demand is interest rate insensitive to loan demand. The study recommended that MFIs should design appropriate products that are flexible enough to meet the different needs of the poor for both production and consumption purposes. Government 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;

Keywords: Grameen Bank, Microfinance, Poverty Alleviation