Answer To: KING’S OWN INSTITUTE* Success in Higher Education FIN204 MICROFINANCE T220 01/07/2020 15:12 PAGE 1...
Sarabjeet answered on Sep 12 2021
Running Head: Literature Review
Literature Review
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Contents
Executive Summary 3
Introduction 3
Literature Review: Microfinance Institutions — their operation, regulation, financing, lending policies, and impacts 4
Regulation that should be implemented to ensure sound oversight and consumer protection 5
Describes how the MFIs should obtain their funds, and whether subsidies should be granted. 5
Details the lending policies to be introduced, including likely borrowers, loan limits, and interest rates. 6
Assesses likely impacts (economic, cultural, and psychological), including criticisms and drawbacks 8
Analysis of 10
Recommendations 10
Conclusion 12
References 13
Executive Summary
The provision of micro-credit to the poor more particularly to the youth and women is an important factor in reducing poverty through empowerment. Many studies show that self-employment can create jobs and increase incomes. There are signs of independence for women and youth, which include household expenses for women and youth, which can allow young people to become self-employed and thus increase income. This report discusses Microfinance Institutions and their operation, regulation, financing, lending policies and impacts. This report discusses the history of and the reasons for establishing MFIs, with a brief outline of their structure. This study outlines regulation that should be implemented to ensure sound oversight and consumer protection. How the MFIs should obtain their funds, and whether subsidies should be granted and details the lending policies to be introduced, including likely borrowers, loan limits and interest rates are also included in this report. Likely impacts (economic, cultural and psychological), including criticisms and drawbacks and recommendations for the direction for the Govemment implement, implement with safeguards or abandon are also discussed in this report.
Introduction
The revolution ofmicrofinance has changed the way we treat poor people in Latin America andAsia. Some of thenation’s lend large amounts of credit, usually to low-income groups or households, which is usually rejected by official financial institutions. In turn, significant research efforts to assess Coverage and the impact of such programs on poverty. This literature review examines the extent to which microfinance aims to benefit the poor, ensure a measurable and positive influence on the lives of clients as well as their families, establish financial institutions or reach out, and empower poor females and also youth in society. The issue of poverty has been referred to as the World Bank. Finally, Africa and Asia, including parts of Asia, with India, are groups of the European empires.Industrial countries have some responsibilities to the world’s poor.When they gained independence, they needed some help. The US-led strategy is to introduce free trade in developing countries, which it hopes to incorporate into the formal economy. As long as the country follows the policies set by the World Bank, it can provide loans to developing countries through state governments and other official institutions. The disadvantage is that most of the money was transferred to people of political ability. Decades of aid have been ineffective when reports of corruption surfaced. Many people believe that government aid has become dependent and, as a result, has failed to help the community out of poverty. If such large global organizations and state governments fail to address poverty, then microfinance will be at the forefront of social change develop thinking. This change at the time led to a change in economic thinking. The move brought Thatcher and Reagan to power in support of a free-market solution also a general lack of confidence in official institutions. Though, the ideological process has moved in the right direction, creating microfinance opportunities. With the promotion of microfinance, the focus has shifted to growing and supporting the "informal" sector, and hopefully, a helping hand can lift people out of poverty(Janda and Zetek, 2015).
Literature Review: Microfinance Institutions — their operation, regulation, financing, lending policies, and impacts
Reasons for establishing MFIs
Microfinance refers to the provision of financial services: the provision of credit, savings, insurance, or transfers to poor families. This allows them to work independently by doing business and earning income(Dube and Kamath, 2018). Thus, (Webster) and Fiedler, 1996) believe that the initial training of business skills should be combined with the provision of microcredit to progress the ability of the poor to use the funds as well as health and business asset insurance, but these are ignored by the profitable banks.(Sarah, 2011) argues that microfinance allows the world's poor, especially women in developing countries, to empower themselves. In the case of gender equality, microfinance as an effective tool to promote empowering women and youth(Geonka and Henley, 2011).
Regulation that should be implemented to ensure sound oversight and consumer protection
Microfinance banks have strict regulations. The control of microfinance institutions is usually much quieter. They work with clients not only as lenders but also as mentors for small businesses (Toth, 2013). Microfinance organizations increase operating costs due to their business model, which is a model of home-based services due to staff training and lower credit levels. With the introduction of microfinance policy by former CBN Governor Professor Chukwuma Soludo, the microfinance banking business was established in 2005(Dube and Kamath, 2018). This policy is driven by the impact of microfinance, which is praised internationally for helping the able-bodied to get out of poverty and thereby reduce poverty. Therefore, the purpose of establishing a microfinance bank is to help reduce poverty in the country over time (Maitrot and NiiooZarazza, 2017).
Describes how the MFIs should obtain their funds, and whether subsidies should be granted.
According to the World Bank, an estimated 1.7 billion people worldwide do not have access to...