Mind the Gap in Financial Inclusion! Microcredit Institutions fieldwork in Peru (original) (raw)
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TOWARDS AN INTEGRATED APPROACH TO MICROFINANCE
This report focuses on the contemporary field of microfinance in Peru and Bolivia, two countries that have well-developed and rapidly growing microfinance sectors, and whose microfinance institutions (MFIs) serve as models for the rest of Latin America and even the global microfinance community. While much research in this broad field emphasizes the perspective of the recipients of microfinance, this work primarily focuses on the qualitative perspective of MFI management, attempting to understand the rationale behind particular organizational choices. One of the most commonly asked questions in the field of microfinance is how can practitioners find the balance between financial viability and living up to current industry standards, while not losing sight of the original development goals of microfinance. Research studies have demonstrated a lack of significant social impacts resulting from pure microcredit; these results suggest that microfinance should incorporate social interventions if it wants to serve as a tool that works towards accomplishing development milestones such as the Millennium Development Goals. To answer these questions, this report compares a variety of MFI management perspectives on two major topics: the types of services offered to clients, and the relationship between financial sustainability and social impact in their organizations. The qualitative data collected from interviews with microfinance managers and experts, as well as supplementary quantitative and qualitative data from academic and practitioner- based literature suggest that the integrated approach has the potential to achieve the balance between enhancing MFIs' ability to both bring about authentic and comprehensive social impact and to allow these entities be solid and financially viable. Thus, I ultimately argue that the integrated model of service delivery, in the appropriate contexts, is highly valid and should be expanded upon in the field of microfinance.
Managing Services in the Knowledge Economy 2011 (Conference Proceedings), 2011
A dynamic chain of activities can be observed in the international economy which would require an efficient and effective financial sector capable of integrating a flexible system of monitoring the flow of financial resources from debtors to creditors. But is this happening? Are all industries financially linked? The fundamental question that this research aims to answer is: how does microfinance promote financial inclusion and financial development? The answer shall be achieved through the following objectives: to illustrate the link or relationship between microfinance and financial inclusion; to show empirically how microfinance influences financial inclusion; and lastly to identify the influence and relationship of microfinance access and financial inclusion to financial development. The conjectures of the study shall be tested from a set of international data on the microfinance industry and the findings verified for the Philippine case. Four points can be inferred. First, microfinance outreach has a significant relationship to financial inclusion. Second, financial inclusion has a significant positive relationship to financial development. Third, other indicators such as capital access, capital depth, size and gross domestic product contribute to an improvement in financial development. Lastly, total loans outstanding, number of active borrowers and portfolio at risk likewise positively and significantly affect financial development in the Philippines. Group lending mitigates the high level of risk inherent among micro-borrowers, making microfinance institutions capable of contributing to a country’s financial development. Keywords: Microfinance industry, financial development, financial inclusion, knowledge economy Suggested Citation: Dacanay, Jovi C., Bienvenido Nito and Patricia Buensuceso (2011) “Microfinance, Financial Inclusion and Financial Development: An Empirical Investigation with an International Perspective” Proceedings of the International Conference on Managing Services in the Knowledge Economy, July 13-15, 2011, Universidade Lusíada de Famalicão, Vila Nova de Famalicão , Portugal, pp. 153-173.
Microfinance Institutions: Instrumental for Promoting Financial Inclusion
Financial Markets, Institutions and Risks, 2021
This opinion paper provides a general overview of microfinance / microcredit which is considered one the major program to minimize the poverty, women empowerment and to socioeconomically inclusive society. There are number of success and failure stories mostly from Africa, Asia, and Latin America; however, the microfinance is global agenda of contemporary world. Based secondary sources, and own experience, the paper provides the general overview of microcredit, its success, the obstacles of microfinance and outlines very brief cases of Nepal and Bangladesh. And finally, paper provides a brief recommendation on how microcredit can be successful especially to the developing world.
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As a response to many partial and over-simplistic theoretical and empirical studies, this paper presents a more comprehensive analytical framework for assessing the success of microfinance in achieving its dual objective of financial sustainability and poverty reduction. By giving centre stage to the study of group dynamics and using principles of social psychology and imperfect information, the paper argues that microfinance has not only not solved the original problems of information asymmetries between borrowers and lenders but also, in its pursuit of financial sustainability, is destroying the very foundations of these schemes by disrupting the social fabric of communities, creating more poverty and excluding the poorest and most vulnerable from any given group.
Microfinance and poverty reduction: the problematic experience of communal banking in Peru
As a response to many partial and over-simplistic theoretical and empirical studies, this paper presents a more comprehensive analytical framework for assessing the success of microfinance in achieving its dual objective of financial sustainability and poverty reduction. By giving centre stage to the study of group dynamics and using principles of social psychology and imperfect information, the paper argues that microfinance has not only not solved the original problems of information asymmetries between borrowers and lenders but also, in its pursuit of financial sustainability, is destroying the very foundations of these schemes by disrupting the social fabric of communities, creating more poverty and excluding the poorest and most vulnerable from any given group.
Microfinance and the challenge of financial inclusion for development
This article provides a review of the recent literature on microfinance in developing countries and a critical assessment of its effectiveness. It examines the experience of India, which has one of the largest microfinance sectors in the world, and particularly the unfolding of the microfinance crisis in Andhra Pradesh. It concludes that microfinance cannot be seen as a silver bullet for development and that profit-oriented microfinance institutions are problematic. To fulfil even some of its progressive goals, it must be regulated and subsidised, and other strategies for viable financial inclusion of the poor and of small producers must be more actively pursued.
Latin American Policy, 2016
Several political and academic circles have considered microfinance to be an important tool to promote economic development and the reduction of poverty. It became a worldwide phenomenon, and the practice disseminated in many developing countries such as Brazil. Even as many authors sing the praises of microfinance-in particular the success in developing countries-the actual experience has fallen short. The goal in this article is to provide a critical analysis of the recent practices of microfinance in Brazil. The article also presents the general characteristics of microcredit in Brazil within the context of the broader development strategy pursued, in particular since stabilization and the inception of neoliberal policies in the mid-1990s. It is argued that microfinance plays an insidious role, making market-friendly solutions for social problems more acceptable. El microcr edito es visto en diversos medios pol ıticos y acad emicos como un instrumento importante para reducir la pobreza y promover el desarrollo econ omico. Se ha transformado en un fen omeno global y se ha diseminado en varios pa ıses en v ıas de desarrollo como Brasil. Aunque muchos han propagado el gran suceso de la microfinanza-particularmente en pa ıses menos desarrollados-los resultados son en realidad bastante pobres. El presente art ıculo presenta las caracter ısticas generales del microcr edito en Brasil en el contexto m as amplio de la estrategia de desarrollo implementada a partir de la estabilizaci on monetaria y el programa neoliberal iniciado en la d ecada de 1990. El art ıculo sugiere que la microfinanza ha jugado un papel insidioso, haciendo las soluciones neoliberales para los problemas sociales m as aceptables.
Microfinance in Peru as Part of the Strategy of an International Investment Fund
International Journal of Economics and Finance, 2015
This paper arises from the idea that in the current conditions of the credit crunch, the Microcredit can be a solution for small businesses that find it increasingly difficult to obtain credit from the banking system and also an opportunity of investment for international investors which want invest in this sector. However, for realize it there must be a system of specialized microcredit institutions and a critical mass of financial need that justifies the action also of investors, including international. Hence the idea of this survey on microfinance in Peru where we analyze the system of Microcredit and estimate, among other things, the financial needs of the institutions of Microcredit.