...Spandana Case Study: An Analysis This essay is based on the first randomized Impact evaluation of Microfinance. Section 1 explains the methodology of the study, Section 2 presents the data analysis and results, Section 3 presents the Caveats to be considered while interpresting the results, Section 4 presents some conclusions derived from the study and Section 5 talks about how some of the problems identified with respect to MFIs can be addressed. In a paper named “Miracle of Microfinance: Evidence from a randomized evaluation”, Abhijit Banerjee, Esther Duflo, Rachel Glennerster and Cynthia Kinnan analyze the first randomized evaluation of the impact of introducing the standard microcredit group-based lending product in a new market. This study also follows the households over the longest period of any evaluation (three to 3.5 years after the introduction of the program in their areas) to trap impacts not only in the short run but also over the medium run. The results of this study compel us to think about the functional difference that the microfinance initiatives are making in the target community and whether it’s time to address this sphere of developmental finance with less fancy and more caution. SECTION 1: METHODOLOGY OF THE STUDY CONSTRUCTION OF THE RCT Baseline Survey A baseline neighbourhood survey (2005) was conducted to assess baseline conditions such as household composition, education, employment, asset ownership, expenditure, borrowing, saving, and any businesses...
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...Term paper On Microcredit ECO -242 Principles of Macroeconomics Prepared for Janifar Alam Lecturer School of business Prepared By Group 1 Sec: B Semester: Summer-2013 31th July 2013 To Janifar Alam Lecturer School of business University of Information Technology and Science (UITS) Subject: Submitted the Term paper of ECO-242 Dear Madam It is indeed a great pleasure for us to be able to hand over the result of our hardship of the group Term paper on Microcredit.This report is the result of the knowledge. This has been acquired from the respective course. We tried our level best for preparing this report. The information of this report is mainly based on our knowledge and Internet information. We fervently hope that you will find this plan worth reading. Please feel free for any query or clarification that you would like us explain. Hope you will appreciate our hard work and excuse the minor errors. Thanking you for your cooperation. Sincerely Group 1 Name&ID Signetures Rahat a jan 12310577 Jinia Afrin 12410291 Abdia Sultana 12310290 Jahidul Islam 12310377 Obaidur Rahman 123210572 Acknowledgement First of all we want to give thanks to almighty Allah for giving us the opportunity to complete...
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...PHIL 2050-006 4/21/2011 MicroFinance Microfinancing is a system that provides small loans to some of the poorest communities in underdeveloped countries all over the world. The ultimate goal of microfinancing is to help the poor pull themselves out of poverty. In America, people typically use loan money to increase their assets. These assets could consist of a starting a business or making an investment with the expectation of gaining a return; they do not typically use the money to purchase the basic necessities of life. However, in underdeveloped countries, residents take out loans through the concept of microfinancing to get through their everyday life. My thesis states that there is a common misconception that Microfinancing Institutions (MFIs) only loan money to poor people in order for them to start a micro enterprise (also known as a small business). With this misconception, people do not acknowledge the fact that they live a significantly different lifestyle than those in underdeveloped countries. In this paper, I argue that despite the lack of increased income that an investment may bring, (to someone in a developed country), microfinance is very beneficial to the poor by providing the ability to maintain financial stability. MFI’s are beneficial to those in underdeveloped countries in three ways: maintaining basic needs, paying for health and family emergencies, and empowering women. A major problem in understanding the financial impact of these...
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...: MRS ISOBEL WOOD DR TERESKA KARRAN Coursework Feedback & Assessment Module Code Student Name: Student ID Number: Submission Date: 20 January 2012 Assignment 1 Research Title: Microcredit and Poverty Eradication; a further investigation in Village Tajpur, Bangladesh: A case study approach. Background of the research: Microfinance has emerged in 70s and officially displayed in 1981 through the establishment of Grameen Bank (GB) by noble laureate Muhammad Yunus in Bangladesh, a south-east Asian country (Grameen-info, 2011). In last three decades, more than 100 countries have adopted microfinance for socio-economic development through reducing poverty (Money, 2011). Microfinance is the combination of three domains of financial support—micro-insurance, micro-savings and microcredit where the third one is initially provided to poor for poverty reduction. In recent years, the theory has been controversial tremendously. The prime minister of Bangladesh, sheikh Hasina viewed that Microcredit has been proved completely unable to reduce poverty even it is sucking the blood of the poor (NY times, 2011). Another scholar, the professor of Manchester University Hulme, (2007) viewed that microcredit even could not scratch the surface of the poverty. The report of World Bank, (2005) also supports the view of above scholars that 124 million people in the world live under $1.25 each day where group of poor is defined as extreme...
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...Report On Microcredit and Economic Development of Bangladesh Submitted To: Mahmood Hasan Course Instructor BUS 251 Section - 7 BBA Program School of Business North South University Submitted By: Page No. 1. Executive Summary 4 2. Introduction 5 3. Micro credit 6 4. Three C’s of microcredit 7 5. History 8 6. Micro credit delivery models 9 7. Clients of microcredit 12 8. Microcredit in economic development 13 9. Impact of microcredit on poor people 15 10. Economic condition of Bangladesh 17 11. Microcredit in Bangladesh 19 12. Challenges of microcredit 22 13. Conclusion 23 14. Reference 24 15. Appendices 25 The most important finding in the last two decades in the world of finance did not come from the world of the rich or the relatively well-off. More important than the hedge fund or the liquid-yield option note was the finding that the poor can save, can borrow (can indeed decide on loans to fellow poor), and will certainly repay loans. This is the world of microfinance. The interest in microcredit or microfinance has burgeoned during the last two decades: multilateral lending agencies, bilateral donor agencies, developing and developed country governments, and non-government organizations (NGOs) all support the development of microcredit. A variety of private banking institutions...
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...RISK ASSESSMENT AND MITIGATION ANALYSIS: MICRO-CREDITS FOR ROMA COMMUNITIES IN HUNGARY Prepared by Volodymyr Tounytsky, Zoltan Kristof and Alexandra Windisch-Graetz For UNDP, “Micro-credit programme for disadvantaged groups in Hungary – with a special focus on the Roma population”(Pr.Nr. 00042644) TABLE OF CONTENTS 1. Executive summary 3 2. Overview of status of micro-lending in general, for vulnerable groups and Roma population in particular 3 2.1 A brief look at the competition: Usury and quick loans in Hungary 7 3. Description of Hungarian microfinance project 11 4. Risk analysis of micro-lending institution and its operations for disadvantaged groups as designed under the Micro-credit program for disadvantaged groups in Hungary and mitigation guidelines 12 4.1 Institution Related 13 4.2 Target Group Related 14 4.3 Product Related 15 4.4 Loan Process 21 4.5 Delinquency and Defaults 27 5. A set of indicators for risk monitoring and portfolio management 30 6. Conclusions and Recommendations 30 Table 1. Risk Areas and Mitigation Approaches 32 Table 2. Characteristics of Client Economic Activities 36 Table 3. Product Specification Sheet: Credit Product 38 Table 4. Loan Analysis Form 39 Table 5. Financial Statements With Loan Loss Provision and Reserve 42 Table 6. Portfolio Management Indicators 43 1. Executive summary This report has been commissioned by the UNDP, Project Nr. 00042644 “Micro-credit programme...
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...debates on poverty alleviation. Microfinance can be defined as the sustainable delivery of financial services to the poor that aims at creating a world in which as many poor households as possible, have access to a suitable range of financial services (Christen, Rosenberg and Jayadeva, 2004). However, the large majority of impact studies of microfinance lack empirical support and several limitations and obstacles continue to haunt the potential outcomes of microfinance, such as selection bias (Tedeschi, 2007) and lack of integration with the commercial banking sector (Copestake, 2007). In my thesis, I will focus on yet another limitation, that of lack of entrepreneurial knowledge amongst lenders in microcredit. I will develop on the marginal impact of entrepreneurial training on microcredit and suggest an empirical framework. The paper will start by presenting the topics of entrepreneurship and microfinance and the current situation in Tanzania. In Part II a review of an important study by Karlan and Valdivia will be discussed and in the following section a suggestion for a framework for an empirical study will be made. Conclusions and limitations will be presented in the final sections. Student: Eva Teekens ID: 5704871 Study: Master Business Studies Specialization: Entrepreneurship Supervisor: Prof. Sautner Handed in: 16-06-2009 Pages: 82 Table of Contents 1. Introduction and Scope of the Paper ..............................................................................
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...“Yunus has changed, not his followers”. This is with this sentence that Grameen Koota’s managers synthetized the model of their microfinance organisation. Indeed, they argued right from the beginning that Grameen Koota was strictly following the Grameen methodology, as it had been conceived in its early days. Grameen Koota was then born to deliver, in a cost-effective and sustainable manner, affordable credit to the poor in Bangalore, making it possible for them to borrow money without being required any documentation, collaterals and transaction history. The purpose of this report will be to analyse how Grameen Koota institution integrates in the Indian framework of microfinance and financial inclusion. One knows the microfinance context in India has soon been dominated by Self-Help-Groups. Usually formed by 20 members, they work as a micro-bank which collect members’ savings and grant them loans. Many cultural and operational differences can be observed with the Grameen model where groups are ruled quite strictly by a MFO: savings are compulsory, loans are granted according to an inflexible logic and reimbursement are highly scheduled. Even though the Grameen classic model has seen the necessity to adapt itself – with the Grameen II model in 2001 – and in spite of India SHGs tradition, to what extent Grameen Koota strictly replicates the original Bengali Grameen model? Have the organization been inspired by Indian microfinance legacy? Is Grameen Koota model replicable? ...
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...Poverty is unnecessary * Muhammad Yunus A big idea sometimes starts out small. In 1974, after earning his Ph.D. in the U.S., Muhammad Yunus was teaching economics at Bangladesh's Chittagong University. As the founder of Grameen Bank and the pioneer of microcredit, Muhammad Yunus has transformed the third world with his visionary leadership. Microcredit is the innovative banking program that provides poor individuals with small loans so that they in turn can become agents of change by launching their own businesses and beginning to address the issue of poverty within their communities. Mohammed Yunus as a visionary: Muhummad Yunus believes that poverty can totally be conquered in his lifetime is the right approach is adopted. This viewpoint is based on his belief that the inherent ability of the poor can be unleashed once they are given the opportunity to help themselves (muhammadyunus.org). His dream of addressing poverty through an economic development lens became a reality with the establishment of Gramee Bank in Bangladesh, which recognized that credit without collateral is a fundamental right of the poor. Grameen Bank was a grand success and has been widely replicated all over the world. Yunus was awarded the Nobel Peace Prize in 2006 for his transformative work in micro-financing. Mohammed Yunus as a Transformational leader; Dr. Yunus’s transformational move, said Sen. Durbin, was to involve himself personally in the battle against poverty in Bangladesh....
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... In fact, most are illiterate and subject to exploitation and harassment by moneylenders, employers, and officials. Witnessing the terrible conditions faced by women working as weavers, stitchers, cigarette rollers, and waste collectors, Ela Bhatt began helping these women to organize themselves. In 1972, Ela Bhatt founded the Self-Employed Women's Association (SEWA) to bring poor women together and give them ways to fight for their rights and earn better livings. Three years after SEWA was founded, it had 7,000 members. Today it has a total membership of 700,000 women, making it the largest single primary trade union in India. Bhatt lead SEWA to form a cooperative bank in 1974 - with a share capital of $30,000 - that offered microcredit loans to help women save and become financially independent. Today the SEWA Cooperative Bank has $1.5 million in working capital and more than 30,000 depositors with a loan return rate of 94 percent. Through years of organization and strategic action, Ela Bhatt developed SEWA from a small, often ignored group into a powerful trade union and bank with allies around the world. During the last three decades, SEWA's efforts to increase the bargaining power, economic opportunities, health security, legal representation, and organizational abilities of Indian women have brought dramatic improvements to hundreds of thousands of lives and influenced similar initiatives around the...
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...A SIMPLE REPRESENTATION OF THE ACTIVITIES OF MICRO FINANCE INSTITUTIONS Annesha Zeheen Introduction This paper attempts to graphically present a simplified version of the activities of a microfinance institution (MFI) with a view to facilitating our understanding of its activities and role in economic development, creating an enabling environment for MFIs to work, promoting and fostering sustainable development of microfinance institutions and comprehending the need and ways to regulate them. The main function of a microfinance institution is to provide sustainable financial services mainly to the small borrowers and clients. Intially 5 to 6 like-minded persons mostly women organize a Group, several groups make a Center. Usually memebrs have to attend the weekly meetings and deposit weekly savings. The loans are mostly provided against little or no collateral, but repayment rate is generally commendable because of the peer pressure originated from members of groups. MFIs’ services are not limited to credit, but include savings, insurance, money transfers and others. The credit-deposit methods include group-lending and -liability, short repayment period with frequent installments, pre-loan savings requirements, gradually increasing loan sizes, and an implicit guarantee of ready access to future loans if present loans are repaid fully and promptly[1]. (Microfinance Gateway 2009). Borrowers take micro-loans for starting or expanding small busenesses, fro the profit of...
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...Development Franchising as a Social Innovation: When Entrepreneurial Expertise is Lacking Isaac H. Smith David Eccles School of Business University of Utah Kristie K. Seawright Marriott School of Management Brigham Young University Contact: Isaac H. Smith; isaac.smith@business.utah.edu; (T) 801-518-2991; 1645 East Campus Center Drive, 22 KDGB, Salt Lake City, UT 84112 Promoting entrepreneurship in “developing” nations has become a popular strategy for alleviating poverty and stimulating economic development (Khandker, 2005). For example, the worldwide proliferation of microfinance institutions is based on the assumption that providing individuals with better access to financial capital will fuel entrepreneurship and microenterprises, providing opportunities for people to work their way out of poverty. The results of such efforts, however, have been mixed (Snow & Buss, 2001), in part, because not all microfinance borrowers have the entrepreneurial skills sufficient to make a microenterprise succeed (Karnani, 2007a). Cross culturally, successful entrepreneurs have been shown to possess a different set of knowledge structures, or mental schema, than non-entrepreneurs (Mitchell, Smith, Seawright, & Morse, 2000). Interestingly, franchisees—often considered to be entrepreneurs (e.g., Baucus, Baucus, & Human 1996; Grunhagen & Mettelstadedt, 2005)—have been found to have entrepreneurship-related knowledge structures more closely resembling non-entrepreneurs than entrepreneurs...
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...Grameen Bank Voluntary Social Systems in action Bangladesh Population: 145 million Capital: Dhaka (11 million) More than half the population is landless After the war, returned to Bangladesh Ph. D. in Economics Vanderbilt Univ Nashville, TN Tried working in the Govt, resigned in two months. Taught at Tenesse State and in Colorado Chairman of Dept of Economics, Chittagong University Dr. Mohammed Yunus Motivation “I felt extremely ashamed of myself being part of a society which could not provide $26 to forty-two able, skilled human beings who were trying to make a living.” Dr. Yunus, testifying before the U. S. Congress Select Committee on Hunger, in a hearing devoted to microcredit Target Customers The Landless No Collateral No Guarantee Customers are never taken to court for default Target Customers The Landless Villagers whose No Collateral families were “functionally No Guarantee landless,” didn’t own enough land to live off for most of the year. Customers are never taken 0.4 acres upper limit. court for default to Ownership Owned by Borrowers (94%) Govt (6%) Money Disbursed $5.25 billion Disbursed $4.64 billion Repaid $425.15 million in 2005 $585 million Projected in 2006 Loan Recovery Rate 99.01% In 1996, Grameen’s repayment rate of 97% was considered comparable to Chase Manhattan’s rate. Borrowers 5.58 million 96% women Rani’s husband: “If the bank...
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...Abstract Contents: Context- Objectives of group lending- Methodology- Some experiences of FINGOs, Potentialities- Limitations-Further improvements suggested- Conclusion Micro credit was visualized as a specialized sector by central bankers in 1970s as a necessity to serve small business and rural poor households who were out of reach of banking services in Nepal. Historically priority sector credit, small farmer development program, production credit for rural women, micro credit for women, and saving, credit cooperatives, and deprived sector credit programs are major initiatives from formal financing system. Thousands of informal occupational groups and community groups function informally. Main thrust of both formal and informal agencies is group mechanism to generate saving, serve micro credit and other social development inputs to their group members. Poor households variously called low income families, Janajati, backward Madhesi, Dalit, Women, and unemployed youth who live in rural areas have low saving, low capital base are excluded by banks and financial institutions intentionally from their service folds. They lack general and financial literacy. As an individual they are ineligible to take loans. They are recognized by financing institutions under Groups as legal entity. The Financial Intermediary Act 2055 recognizes groups including 4 to 10 members from disadvantaged households as a unit to receive social and financial inputs. From lenders’ as well as borrowers’...
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...1 SWOT Analysis of Grameenphone Ltd. Abstract: Grameenphone widely known as GP, is the leading telecommunications service provider inBangladesh. With more than 32 million subscribers (as of June 2011), Grameenphone is the largestcellular operator in the country. It is a joint venture enterprise between Telenor and Grameen TelecomCorporation, a non-profit sister concern of the internationally acclaimed microfinance organization andcommunity development bank Grameen Bank. Grameenphone was the first company to introduceGSM technology in Bangladesh. It also established the first 24-hour Call Center to support itssubscribers. With the slogan Stay Close, stated goal of Grameenphone is to provide affordabletelephony to the entire population of Bangladesh. From the SWOT analysis we are trying to know thecompany’s strategic position as well as Strengths, Weaknesses, Opportunities, and Threats. 1. STRENGTHSGood Ownership Structure: Grameenphone has the best ownership structure in thetelecommunication industry in Bangladesh. Telenor is one of the largest companies,which is operating in different countries around the world. Again, in Bangladesh,Grameen Bank is one of the largest NGO, which has the sound communication allover the country. It is a joint venture enterprise between Telenor (55.8%), the largesttelecommunications service provider in Norway with mobile phone operations in 12other countries, and Grameen Telecom Corporation (34.2% ), a non-profit sisterconcern of the internationally...
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