Download or read book Analyzing the Trade Off Between Outreach and Financial Performance for Indian Microfinance Institutions written by Subham Kailthya and published by . This book was released on 2014 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: Microfinance institutions (MFIs) in India are undergoing a structural change where previously donor driven, subsidy-reliant institutions are graduating into for-profit, publicly listed organizations. This necessitates a close examination of the nature of inter-relatedness between the MFIs' objectives of outreach and financial performance.A synthetic index, one for each dimension of performance - outreach and financial stability - is created for each MFI using factor analysis. The factor scores computed are then used as dependent variables in a Seemingly Unrelated Regression (SUR) framework to identify the determinants of performance.The results suggest that expansion of coverage and sustainable financial performance are strongly inter-connected objectives. While operational efficiency, leverage and institutional structure affect financial performance, outreach is driven by better aligned staff incentives, reduction in operational costs and ability to manage greater risks. A strong 'learning by doing' component is observed to exist in the microfinance industry.
Download or read book Trade Off Between Financial Performance and Poverty Outreach Evidences from Panel of Indian Microfinance Institutions written by Tariq Masood and published by . This book was released on 2016 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: The present study tried to empirically ascertain the relationship between financial orientation of microfinance institutions and their poverty outreach in Indian context. An unbalanced panel of 55 microfinance institutions covering the period 2005-2009 is taken. We relied mainly on the Hausman and Taylor panel data model due to the inclusion of time invariant regressors which make fixed effect model inapplicable and the assumptions underlying random effect model are not fulfilled. Empirical exercise suggests the existence of a trade-off. Regulation or profit orientation seems to play significant role. Geographical location and lending approach followed by MFIs does not affect poverty outreach. Grameen model is the best approach as far as targeting of females is concerned while the individual lending approach has least targeting of female clients.
Download or read book Microfinance Institutions written by R. Mersland and published by Springer. This book was released on 2015-12-11 with total page 329 pages. Available in PDF, EPUB and Kindle. Book excerpt: Research on MFI performance is still in its infancy. MFIs are hybrid organizations with dual objectives. Performance studies in microfinance are therefore less straightforward compared to performance studies in traditional banking research. This book contains new MFI performance research by top scholars from across the globe.
Download or read book An Exploration Into the Double Bottom Line Commitments of Indian Microfinance Institutions written by A. P. Pati and published by . This book was released on 2016 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt: Microfinance industry has emerged from a small domain institution to a broad tool for social development, as many success stories reveal its true potential for serving the society. Nevertheless, like any financial institution it has to fuel its needs in order to sustain its developmental activities. This is where the notion of double bottom line surfaces that adheres to a win-win situation for the microfinance institutions as well as the clients to whom they are serving. However, in reality there persist other unprincipled grounds that hamper this thought and diverges the activities of the MFIs towards attaining better and higher revenues leading to a trade-off. Our paper tries to objectify the presence of this as to what extent the double bottom line is realised in the MFIs of India. Further, we also try to find if there is a trade-off between financial performance and social performance. We have used a dataset comprising all the Indian MFIs reported online at MIX Market for the period from 2009 to 2013. The analysis is carried out on various indicators that resemble the performance and efficiency of the MFIs. The evidences suggest that Indian MFIs are adhering to the notion of double bottom line and the scale of outreach in terms of number of borrowers mainly guides their objectives.
Download or read book Financial Performance and Outreach written by Robert J. Cull and published by World Bank Publications. This book was released on 2006 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: Microfinance contracts have proven able to secure high rates of loan repayment in the face of limited liability and information asymmetries, but high repayment rates have not translated easily into profits for most microbanks. Profitability, though, is at the heart of the promise that microfinance can deliver poverty reduction while not relying on ongoing subsidy. The authors examine why this promise remains unmet for most institutions. Using a data set with unusually high quality financial information on 124 institutions in 49 countries, they explore the patterns of profitability, loan repayment, and cost reduction. The authors find that institutional design and orientation matter substantially. Lenders that do not use group-based methods to overcome incentive problems experience weaker portfolio quality and lower profit rates when interest rates are raised substantially. For these individual-based lenders, one key to achieving profitability is investing more heavily in staff costs-a finding consistent with the economics of information but contrary to the conventional wisdom that profitability is largely a function of minimizing cost.
Download or read book A Probe Into the Double Bottom Line Commitments of Indian Micro Finance Institutions written by Prasenjit Roy and published by . This book was released on 2017 with total page 19 pages. Available in PDF, EPUB and Kindle. Book excerpt: As an emerging area of financial services microfinance has many success stories that reveal the huge potential for serving the society. However, like any other financial organization micro finance institutions (MFIs) have to survive in addition to fund their needs and wants. The idea of double bottom line emerges from this domain where a win-win situation would be attained by the microfinance for themselves as well as the clients. Yet, in reality, there are other setbacks associated with it that show its dark side. In this paper, we try to explore the presence of this and the extent to which the double bottom line is met by the MFIs of India. Further, if this is not met whether that adheres to a trade-off between financial performance and social performance. We have used a dataset comprising all the Indian MFIs reported in "mixmarket" for the period from 2009 to 2013. The analysis is carried on various indicators that resemble the performance and efficiency of the MFIs. In addition to social performance and financial performance indicators, our study also includes financial structure indicators, revenue indicators, and efficiency ratios to gather a better inference into the operations of the MFIs. The gross loan portfolio (GLP) of the industry shows 12.41% growth whereas the average loan size (ALS) shows a 7.37% growth indicating a possible trade-off. The preliminary evidence suggest that there might be ownership influence in the operations of the MFIs where trade-off are likely observed in non-NGO MFIs in contrast to NGO-MFIs.
Download or read book The Handbook of Microfinance written by Beatriz Armendariz and published by World Scientific. This book was released on 2011 with total page 700 pages. Available in PDF, EPUB and Kindle. Book excerpt: Handbook of Microfinance addresses the gap between clients who are benefiting from access to financial services via MFIs, and the potential market, which remains underserved or untapped. This gap can be attributed to a "mismatch" between what consumers, or potential clients, demand and what MFIs offer in terms of financial products. The scope of the book is wide. It includes successes and failures, main challenges and debates, methodologies for impact evaluation via random trials, leading trends in Asia versus Latin America, main efforts in Africa, the importance of value chains in Central America, ethical and gender issues, savings, microinsurance, governance, commercialization trends and the potential advantages and disadvantages of it. Lastly it features main lessons from informal finance and 19th-century credit cooperatives addressing the above-mentioned mismatch.
Download or read book The Triangle of Microfinance written by Manfred Zeller and published by Intl Food Policy Res Inst. This book was released on 2002-01-01 with total page 426 pages. Available in PDF, EPUB and Kindle. Book excerpt: Since the 1980s when the microfinance revolution began, much has been accomplished, but the field became more refined in the 1990s as a result of shifts in paradigms, strategies, and development practices. This volume addresses the three policy objectives that now occupy those who wish to use credit as a development tool: financial sustainability of microfinance institutions, outreach to the poor, and welfare impact. Inevitable tradeoffs exist among these objectives, and the book advances an analytical framework that assists students of and experts in microfinance to identify the tradeoffs and synergies at the institutional level and in the policy environment. The book features a wealth of empirical data and innovative analytical studies, and critically discusses the role of public support for microfinance institutions (MFIs) in light of the social costs and benefits generated by such financial systems. The book is organized into five parts. The first discusses the demand for and access to financial services by the poor, emphasizing that demand-oriented, pro-poor financial services are crucial in reaching the poor. The second is concerned with two of the criteria used to evaluate MFIsoutreach and financial sustainability. The third features innovative econometric studies seeking to evaluate the impact of MFIs at the household level. The fourth looks at the role of both public- and private-sector institutions in developing sustainable financial systems. And the fifth summarizes implications for policy and research. Given the lack of sound, empirical literature on microfinance, this volume is sure to advance knowledge and research methodology in the field.
Download or read book Outreach and Efficiency of Microfinance Institutions written by Niels Hermes and published by . This book was released on 2008 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper uses stochastic frontier analysis (SFA) to examine whether there is a trade-off between outreach to the poor and efficiency of microfinance institutions (MFIs). Using a sample of more than 1,300 observations, our study suggests that outreach and efficiency of MFIs are indeed negatively correlated.
Download or read book Analyzing the Impact of Legal Form of Indian Microfinance Institutions on Financial Sustainability and Outreach written by Sumil Patel and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: India boasts the largest microfinance market in the world, serving almost 40 million clients through about 220 registered institutions. Microfinance quickly became a popular industry for both business practitioners and researchers due to its ability to reduce poverty. While the industry has been doing well in serving the poor, it is still not reaching everyone that it could. There is room for improvement, and analyzing the legal forms of the industry would help. The current legal landscape of India allows microfinance institutions to take one of five legal forms: (1) Society, (2) Trust, (3) Section 25, (4) Cooperative, and (5) Non-Banking Financial Company. Each form differs in the amount of regulation it must go through, how it can raise capital, rules for formation, taxation, and services it is allowed to perform. This thesis suggests that the form of microfinance institution plays a large role in determining its effectiveness. It considers the laws that govern the microfinance institutions and analyzes the effects of these laws on two important metrics for effectiveness: profitability and client outreach. The thesis explores each legal form by analyzing a company of each type both qualitatively and quantitatively; after that legal forms are analyzed at the industry level. It finds that, at the industry level, Non-Banking Financial Companies are the most financially sustainable legal form and the most successful at client outreach. Therefore, Non-Banking Financial Companies should be promoted in India to make sure microfinance is reaching as many people as it can. Other developing countries around the world can employ some of the effective features of Non-Banking Financial Companies to ultimately reduce poverty in their nations as well.
Download or read book MicroFinTech written by Roberto Moro-Visconti and published by Springer Nature. This book was released on 2021-09-06 with total page 281 pages. Available in PDF, EPUB and Kindle. Book excerpt: Microfinance is a renowned albeit controversial solution for giving financial access to the unbanked, even if micro-transactions increase costs, limiting outreach potential. The economic and financial sustainability of Microfinance Institutions (MFIs) is a prerequisite for widening a potentially unlimited client base. Automation decreases costs, expanding the outreach potential, and improving transparency and efficiency. Technological solutions range from branchless mobile banking to geo-localization of customers, digital/social networking for group lending, blockchain validation, big data, and artificial intelligence, up to “MicroFinTech” - FinTech applications adapted to microfinance. Of interest to both scholars, students, and professors of financial technology and microfinance, this book examines these trendy solutions comprehensively, going beyond the existing literature and showing potential applications to the traditional sustainability versus outreach trade-off.
Download or read book Sustainability of Indian Microfinance Institutions written by Nadiya Marakkath and published by Springer Science & Business Media. This book was released on 2013-10-23 with total page 179 pages. Available in PDF, EPUB and Kindle. Book excerpt: Although 'doing good' is our innate nature, we often get lost in the complexities and view goodness as a distant dream. Making this dream of goodness a reality is often thwarted by thoughts surrounding sustainability. Thus, all good initiatives require a focus on sustainability and this has become one of greatest and most formidable challenges faced by any social enterprise. The book documents the understanding of the sustainability of one of the most celebrated forms of social enterprise of our times — Microfinance Institutions (MFIs) gained through a mixed-methods research investigation. It attempts to answer pertinent questions such as: What are the determinant and discriminating factors for the sustainability of MFIs in India? How are these factors being managed by the operationally efficient Indian MFIs that remained sustainable at reasonable interest rates before the onset of the crisis and ceilings imposition in Indian microfinance markets? What does the Indian microfinance crisis teach us about sustainability management and mismanagement? In a nutshell, the answers show that sustainability is a strategic issue that needs managerial attention and not a matter to be left to serendipity. At a time when the industry is recovering from the adverse effects of a crisis and when there are still contentions as to whether the rate fixed by the regulator is enough for the sustenance of the MFIs, the findings mentioned in the book revive the lost hope for the Indian microfinance industry. By deciphering the strategies used by efficient and sustainable MFIs and discussing the lessons that the crisis has imparted to the Indian microfinance markets, this book will enable Indian MFIs to march towards efficient and sustainable operations without losing focus on their clients.
Download or read book Outreach Sustainability and Efficiency of Microfinance Institutions in Nepal written by Sabin Subedi and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Microfinance Institutions (MFIs) provide financial services to those who have no access to finance and are hence considered a tool for poverty alleviation. However, the clear relationship between the depth of the MFIs and their sustainability is still lacking as there is an ongoing debate on whether the two components complement each other or whether there exists a tradeoff. This study applied the panel regression analysis to the data from 44 MFIs of Nepal from 1999 to 2019 and explored the inter-relationship between depth and sustainability of MFI in the Nepalese context. In addition to the two variables of interest, this study further analyses the interaction effect of operational efficiency. The findings show a significant tradeoff relationship between outreach and sustainability at a 99% confidence interval, further moderated by operational efficiency. As a result of increased operational efficiency, MFIs can have better outreach and sustainability. These findings can thus provide a better policy prescription that promotes operational efficiency and ultimately improve both the outreach and sustainability of MFIs.
Download or read book Microfinance and Poverty written by Hege Gulli and published by IDB. This book was released on 1998 with total page 134 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Financial Inclusion and Livelihood Transformation written by Srimoyee Datta and published by Springer Nature. This book was released on 2023-08-28 with total page 215 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book explores the role and effect of Microfinance Institutions (MFIs) with different dimensions. It is being supported with strong empirical evidence into various parameters of MFIs directed towards inclusive finance and the transformation journey of livelihoods of its beneficiaries. It also incorporates empirical evidence with the perception of both beneficiaries and non-beneficiaries. Starting its journey toward the path of comprehending how MFIs make their footprint among the excluded population in the selected areas, it incorporates the different outcomes of MFI lending like credit utilisation patterns, income generation, and employability. As financial stability helps to break out the vicious cycle of poverty, this book emphasises the self-dependent element for the beneficiaries and their households. It addresses the important issue of the female counterparts in society. It shows how the MFIs work actively to generate female empowerment from multiple dimensions among the selected communities. It addresses key issues to consider for inclusive policy formulation, especially for backward communities in the backward areas and gives a realistic scenario of the MFI activities, their interactions with the respondents, the various outcomes, and areas for further developments, etc. This book is beneficial for academicians, researchers, and policymakers.
Download or read book Mission Drift in Indian Micro Finance Institutions an Empirical Study written by Roy Prasenjit and published by . This book was released on 2023-01-12 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Introduction Microfinance has emerged as a tool for creating a financially inclusive society. Ever since the formal banking system showed limited concern towards reaching the poor on the premise that they were non-bankable. Initially, microfinance institutions (MFIs) started within the domain of non-governmental organizations (NGOs). With the passage of time, they expanded to more professional setups which brought competition and refinement in their operations. After substantial growth in the form of outreach their sustainability came to the forefront where along with social performance, financial performance was given equal importance. This led to the emergence of a double bottom line. However, an imbalance between the two, with more focus on financial performance led to the mission drift in the MFIs. The microfinance movement began decades ago which brought about a considerable change to the economic scenario of the poor. MFIs have been highly regarded for helping the poor. Poverty is a multifarious dilemma that causes impoverishment. It has various complexities that need to be eliminated from the root for all-around development. Ever since the dawn of civilization, various social and economic inequalities have occurred and contributed to making an unequal and poverty-driven society. The conventional forms of credit bridge the gap between the lenders and the borrowers which revolutionized trade and commerce
Download or read book Research Anthology on Microfinance Services and Roles in Social Progress written by Management Association, Information Resources and published by IGI Global. This book was released on 2022-09-23 with total page 711 pages. Available in PDF, EPUB and Kindle. Book excerpt: Microfinance has emerged as a growing field as more businesses discover the benefits and opportunities it provides. To ensure that microfinance is utilized appropriately, further study on the best practices and difficulties is required. The Research Anthology on Microfinance Services and Roles in Social Progress considers the ways in which microfinance can be utilized to achieve social progress as well as the challenges and opportunities of this area. Covering key topics such as income, small businesses, entrepreneurship, and credit, this major reference work is ideal for industry professionals, government officials, computer scientists, entrepreneurs, business owners, managers, policymakers, researchers, scholars, practitioners, instructors, and students.
