...AMRITA BUSINESS SCHOOL, BENGALURU | MICROFINANCE INSTITUTIONS | MARKET RESEARCH PROJECT | | | Contents LIST OF TABLES 2 INTRODUCTION 2 WHY MICROFINANCE? 3 MICRO FINANCE SERVICE PROVIDERS 4 THE EMERGENCE OF PRIVATE MICROFINANCE INDUSTRY 4 MICRO FINANCE IS ALL AROUND US 5 LITRETURE REVIEW 6 SUMMARY OF Y. H. MALEGAM COMMITTEE REPORT 2011 14 Why Malegam Committee Report was Set up? 15 Key recommendation 16 PROFIT AND NON PROFIT ORGANIZATION 21 Differences between for-profit MFI’s and non-profit MFI’s 23 For Profit MFI 23 Non Profit MFI 24 METHODOLOGY 25 CAPITAL STRUCTURE AND ASSET ALLOCATION 25 DEPTH AND BREADTH OF OUTREACH 27 EFFICIENCY 28 PRODUCTIVITY 29 QUALITY OF THE PORTFOLIO 31 ANALYSIS OF NUMBER OF ACTIVE BORROWERS 33 PROFITABILITY AND SUSTAINABILITY 35 CONCLUSION 36 REFERENCES 36 LIST OF TABLES Table 1 Table of Comparision 12 Table 2 Comparison of Debt Equity Ratio 25 Table 3 Debt Equity Ratio 26 Table 4 Comparison of Depth and Breadth of MFIs for the year 2012 with 2010 27 Table 5 Comparison of Depth and Breadth of MFIs for the year 2011 with 2010 27 Table 6 Operating Expense / Loan Portfolio 28 Table 7 Industry Standard for Operating Expense / Loan Portfolio 29 Table 8 Productivity of MFI’s for the year 2010 29 Table 9 Productivity of MFI’s for the year 2011 30 Table 10 Industry standards for year 2010 30 Table 11 Quality of portfolio for the year 2010 31 Table...
Words: 9019 - Pages: 37
...Master Thesis Entrepreneurship and Microfinance: A Framework for Impact Evaluation Abstract The idea and implementation of Microfinance has become a hot topic and is currently at the central stage in 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 ...
Words: 23632 - Pages: 95
...Online Library (wileyonlinelibrary.com) DOI: 10.1002/jid.1639 MANAGEMENT OF MICROFINANCE INSTITUTIONS: DO SUBSIDIES MATTER? MAREK HUDON* ´ libre de Bruxelles, Belgium and Burgundy School of Business, France CERMi, Universite Abstract: It is estimated that donors commit between US$ 800 million and US$ 1 billion to microfinance per year. This paper analyses the management of microfinance institutions (MFIs) and its relationship with donors’ subsidies. The results show that the level of subsidies granted per year is related to the management quality but not the subsidies divided by the gross loan portfolio or the total equity. Well-managed MFIs are larger and regulated organisations but not significantly older. The organisational structure or the experience of the MFI however does not play a role in determining its financial effectiveness, except for cooperatives. Copyright # 2009 John Wiley & Sons, Ltd. Keywords: microfinance; subsidies; management; governance; nonprofit JEL Classification: L31; M54; O16; Q14 1 INTRODUCTION Formal financial institutions have neglected a large part of developing country populations. Considered as high-risk clients, the poor have been denied access to financial services. Microfinance has been praised during the last twenty years as a new development policy tool serving people who have been excluded from the formal banking system. The financial performances of microfinance institutions (MFIs) have been largely highlighted by the international community...
Words: 7594 - Pages: 31
...Chapter 2 Literature Review 2.0 Introduction In this chapter, revision of the relevant literature is undertaken to provide an overview of previous studies related to this particular study. The first section starts with the Principles of Islamic Banking and a description of the products. The next one consists of studies indicating the relief provided by Islamic Microfinance institutions globally. The remaining sections comprise of the factors affecting the demand of Islamic financial products namely, awareness, religious factors and trust among parties. The last sections include the Mauritian government’s assistance in introducing Islamic Finance in the country and measures taken to set high standards and women empowerment. 2.1.1 Products...
Words: 3732 - Pages: 15
...Table of Contents Abstract iii CHAPTER ONE 1 INTRODUCTION 1 Problem Statement 2 Rationale for the choice of topic 2 CHAPTER TWO 3 LITERATURE REVIEW 3 HOUSE FINANCE GLOBAL VIEW 3 HOUSING STRATEGY 4 CONDITIONS TO FACILITATE LENDING 8 DEMAND AND SUPPLY FOR HOUSING 8 TANZANIA HOUSING FINANCE THEORY 10 CHAPTER THREE 12 FINDINGS 12 Demand for housing finance 12 Current Condition in Tanzania 12 Access to Housing Finance 13 HOUSING POLICY AND HOUSING MARKET 14 ACCESS TO HOUSING FINANCE MAIN CHALLENGES 18 CHAPTER FOUR 21 CONCLUSIONS 21 References; 22 Abstract We examine the extent to which markets enable the provision of housing finance across a wide range of Regions in Tanzania. Housing is a major purchase requiring long-term financing, and the factors that are associated with well functioning housing finance systems are those that enable the provision of long-term finance. Across all countries, controlling for country size, we find that countries with stronger legal rights for borrowers and lenders (through collateral and bankruptcy laws), deeper credit information systems, and a more stable macroeconomic environment have deeper housing finance systems. These same factors also help explain the variation in housing finance across emerging market economies. Across developed countries, which tend to have low macroeconomic volatility and relatively extensive credit information systems, variation in the strength of legal rights helps explain the extent of housing finance...
Words: 7874 - Pages: 32
...1 Nurture & Realize Your Potentials NATIONAL ECONOMICS UNIVERSITY INTERNATIONAL SCHOOL OF MANAGEMENT AND ECONOMICS RESEARCH PROJECT Microcredit of TYM Fund in Hanoi – Efficiency Assessment and Recommendations for improvement Instructor: (MSc.) Mai Xuan Thuy Research group: 28 Hanoi, June 2012 2 ACKNOWLEDGEMENT We would like to address our deepest gratitude to our supervisor – (Msc.) Mai Xuan Thuy, whose constructive comments and orientation from the initial to final phase has made it possible for our project to be both clearer and deeper in analysis. It is a pleasure to thank Prof. Marek Hudon, who made this research possible to be conducted in the most appropriate way. In fact, all the method of analysis applied in this project came from Prof. Marek‟s support and suggestion. Furthermore, he also gave us many useful and knowledgeable sources of data and information. This project would not have been possible without the sample‟s participation. Thus, we heartily send our regards to 15 users of TYM Hanoi and as well 7 loan officers. Lastly, we would like to acknowledge here the debt we owe to Ms. Pham Thi Thu Trang – International Relation Officer of TYM Hanoi, who helped us a lot about collecting the data of TYM as well as clear up several questions about TYM. 3 CONTENTS ABBREVIATIONS ........................................................................................................................ 4 TABLES AND FIGURES ....................................
Words: 21635 - Pages: 87
...” Bernard Marr also defines performance indicators as “the most important performance information that enables organizations or their stakeholders to understand whether the organization is on track or not.” Performance indicators or key performance indicators are used in assessing the performance of workers. They help an organization define and measure progress toward organizational goals. Performance indicators are financial and non-financial indicators that org’s use in order to estimate and fortify how successful they are, aiming previously established long lasting goals. They are quantifiable measurements, agreed to beforehand, that reflect the critical success factors of an organization. According to the Ghana Living Standard Survey (GLSS 5 – 2006/2007), Ghana has life expectancy of 57.9 years compared to the world average of 64.3 in 2006. By 2013, the life expectancy of Ghanaians is estimated to increase to 66 years (“Ghana-2010 Population and Housing Census”) Infant mortality stands at 71 per 1000 live births, while 111 out of 1000...
Words: 827 - Pages: 4
...China Microfinance Industry Assessment Report By He Guangwen, Du Xiaoshan, Bai Chengyu, and Li Zhanwu China Association of Microfinance Feb. 17, 2009 This report has been jointly accomplished by Prof. He Guangwen, Director of Rural Finance and Investment Research Center of China Agricultural University (CAU), Prof. Du Xiaoshan, Deputy Director of Rural Development Institute of China Academy of Social Sciences (CASS) and Chairman of Board of Directors of China Association of Microfinance (CAM), Mr. Bai Chengyu, Director of Division III of China International Centre for Economic and Technical Exchange (CICETE) and Secretary General of CAM with the support of the Network Strengthening Program (NSP) of CAM. Mr. Li Zhanwu, Division Director of Ministry of Human Resource and Social Security, Dr. Li Lili of Henan University of Finance and Economics, Dr. Zhang Zhengping, Associate Professor of Beijing Technology and Business University, Dr. Yang Jing of Beijing Material College, and Li Yaning, Yang Lu and Wang Dan from CAU have also joined the research work. Besides, this report has obtained the guidance and assistance from Ms. Wang Dan, Managing Deputy Secretary General of CAM, and the experts of SEEP. Mrs. Wang Li, President of Social Responsibility Department of Citi China has provided strong administrative and professional support. Hereby, special thanks should be given to the above fellows. For more information, pls contact Prof. He Guangwen at heguangwen@sina.com 1 ...
Words: 31883 - Pages: 128
...million was defaulted. The risk has consistently decreased from 7.9 per cent in 2009 to 6.3 per cent in 2010. With the increase in interest rates and inflation rate, non-performing advances were expected to go higher, but it is not the case. This shows that the risk in the Kenyan market is low Interest rates spiked in December 2011 after the Central bank increased its key lending rate to a high of 18 per cent to curb the inflation rate which had peaked at 19.72 per cent in November that year. Though both the Central Bank Rate and inflation rate have dropped to 9.5 per cent and 4.11 per cent, banks are still lending at an average of 17.84 per cent. Microfinance institutions in Kenya have suffered significant loan repayment default resulting into subsequently decreased employment levels and cash flow problems in microfinance institutions this can partly be attributed to the high interest rates of government borrowing. Commercial banks hold about 53.7 per cent of total bills and bonds so banks are left with just about Sh250 billion to lend to private sector keeping demand for loans higher than the supply. Based on this, the Government should...
Words: 8289 - Pages: 34
...Management Information System for MFIs 1.0 Background A good Management Information System (MIS) is the heart of any organization and this is true for MFIs as well. For e.g. MFIs may have capable and motivated staff, but if they lack systematized information, they will be unable to perform up to their potential. A sound MIS is the key to achieve sustainability as it helps in providing the right type of information in achieving sustainability. It helps in reducing default, optimal rotation of portfolio, establishing sustainable interest rates, improving operational efficiency, generating reports at various levels for various stakeholders and review the progress. (Box 1). Common Shortcomings observed in the Information Management Practices: 1.) The basis formats are not comprehensive of them could be combined. 2) The flow and logistic aspects of transfer of information from Society to Federation to HQs and vice versa is not very efficient. 3) The reports produced by the MIS are not in line with the best practices information required. 4) There is no accurate aging analysis of all loans including the past due loans. At best, the aging analysis is approximate and there is no proper asset classification backed up by provisioning. 5) Clients are not classified as good, delinquent and defaulting borrowers based on (international best practices) criteria. 6) Credit history of the borrowers is not available. 7) Clear repayment schedules for borrowers at various levels do not exist...
Words: 3379 - Pages: 14
...ASA NGO: An overview of ASA The Beginnings & Expansion ASA has emerged as one of the largest and most efficient Microfinance Institution (MFI) in the world and has been working relentlessly to assist the poor since its inception in 1978. The major drive behind ASA is to gradually remove poverty from society. During its early years, ASA undertook various development programs like awareness building for social action, training local birth attendants, capacity building of journalists, etc. In the mid-80's it introduced new programs working in the sector of health and nutrition, education, sanitation, etc. It was at this stage that ASA introduced microcredit as a pilot project. From its hands on experience in the field, and by evaluating the impact of development assistance, ASA realized that financial solvency, to a great extent, is what the poor need to bringing positive changes in their lives. In 1992, this paradigm shift led ASA to focus solely on microfinance as its tool in fighting poverty. ASA wanted to evolve its operations to become self-reliant and move away from depending on donor funding and grants - ASA's Microfinance Model gradually transformed itself to become the globally renowned "ASA Cost–effective and Sustainable Microfinance Model." Following this model, ASA became self-sustainable within a short span of time and the organization declared itself a "donor free MFI" in 2001. This model, that has been practiced and perfected in the field by...
Words: 3909 - Pages: 16
...Rabeya feels secured about her future Ms. Rabeya Boshri a beneficiary of the "Jonaki Samiti" of Coast Trust, Cox's Bazar is a successful borrower of microcredit loan operations. She lives with her husband, Mr. Abdus Salam, a daughter and two sons. At present all her children go to school and she is able to bear both the educational and family expenses. Along with that she is now able to make some personal savings additional to general savings of "Jonaki samiti". But things were not the same even few years earlier. Her husband was a day labourer and it was very hard to bear family expenses with his single income. Their life was becoming tougher day by day and Rabeya wanted to do a bit by herself to help her husband from this growing desolation. One day she came to know that a samiti named "Jonaki" operated by Coast Trust, provides loan wih nominal conditions for a number of Income Generating Activities (IGAs). Sooner she spoke to the Chairperson of the "Jonaki Samiti" and became a memeber of that samity. After accomplishing all the regulations together with general savings she got her first loan installment of Taka 7000. She invested the money in vegetable cultivation. Subsequently she was able to sell some amount of vegetable per week after meeting her own family demand which helped her husband with additional income. In the intervening time she was able to save Taka 3000 along with the ragular savings of samiti and gradually she repaid the loan. After the repayment of...
Words: 23669 - Pages: 95
...MICROFINANCE INSTITUTIONS AND ECONOMIC GROWTH OF SMALL & MICRO-ENTERPRISES (SMES) ACASE STUDY OF (UWMFO) MICRO FINANCE INSTITUTION BY HENRY EGYEYU DEDICATION To the memory of my grand father Daniel Egeyu Whose love & enthusiasm for academia first kindled mine? ABSTRACT This research study investigates the impact of microfinance institutions on entrepreneurial development of Small & Micro-enterprises (SMEs) that are craving for growth and development in a war revived district called Gulu. The researcher used questionnaire as an instrument of primary data collection. Tables and simple percentages were used in data presentation. For clear analysis, the study centers on two broad variables; the dependent variable which is entrepreneurial development and the independent variable which is microfinance institutions. Three different hypotheses were formulated and tested using various statistical tools such as chi-square test, analysis of variance and simple regression analysis. The study reveals that (i) there is a significant difference in the number of entrepreneurs who used microfinance institutions and those who do not use them; (ii) there is a significant effect of microfinance institutions activities in predicting entrepreneurial productivity; and (iii) that there is no significant effect of microfinance institutions activities in predicting entrepreneurial development. The researcher concludes...
Words: 12676 - Pages: 51
...columbia.edu). Executive Summary In the early 1970s, Professor Muhammad Yunus envisioned a means of alleviating poverty by circumventing the major impediment to lending to the poorest in society—the need for collateral. He tested this instinct in an experiment in 1976, when he lent about $27 to 42 women in an ordinary Bangladeshi village. Just 30 years later, Grameen Bank has more than 3.2 million borrowers (95 percent of whom are women), 1,178 branches, services in 41,000 villages and assets of more than $3 billion. This paper explores Grameen Bank’s origins, structure, culture, performance and efforts to expand and broaden the microfinance agenda. The authors evaluate Grameen’s success in implementing Yunus’s vision in the light of various challenges and conclude that the short-run effects of microcredit have been positive and that microfinance will continue to make important contributions to poverty reduction. Admittedly, an assessment of Grameen solely in terms of financial viability—that is, without also taking into account the social benefits in terms of the empowerment of women and its positive...
Words: 10917 - Pages: 44
...and shubashish Barua, researcher, InM to meet the requirement of the internship program of BBA. 1.2 Objective of the Report Broad Objective: Broad objective of this report is to meet the partial requirements for the fulfillment of BBA program. Specific Objectives: Internship program aims at providing knowledge about the real world business situation. The objectives of the report are- ➢ To be informed with the top three MFIs of Bangladesh focusing on poverty alleviation. ➢ To get an overview of services rendered by different MFIs. ➢ To identify the critical success factors (CSF) of Microfinance institutions. ➢ To compare the relative performance analysis of top three MFI: Grameen Bank (GB), BRAC and ASA ➢ To identify the problems faced by the MFIs. ➢ To suggest what components should be incorporated with the Microfinance program that will reduce the risk of being vulnerable to poor. 1.3 Limitation of the Study In preparing the report, the main limitations that I faced were- • Regulation from the firm on information as the firm is a private research and confidentiality of information has to be strictly maintained. •...
Words: 23066 - Pages: 93
