The origins of micro finance

Thèmes abordés

Origins of micro-finance, micro finance, financial products, financial systems, investors

Résumé du document

Microfinance refers to the provision of financial products and services to the poor, excluded of traditional financial systems. If microcredit is the best known dimension of microfinance, the latter, however, has a wide range of products and services, as indispensable as the current account, savings, remittances and insurance.

Extraits

[...] TO CONCLUDE So, to sum up, if we assess the advantages and the drawbacks; our personal opinion is that micro financing may be the solution for the development in poor countries because it helps to give tools to those who are excluded from the financial system and must push this concept so that it can help the poorest of the poor. However, we believe that this activity should be supervised. Indeed, too few controls exist which leads to excess, sometimes, tragic consequences. Really, each country must decree essential laws to the proper functioning of micro financing. For example, in the case of SKS, the government promulgated a legislation condemning "harassment" of loan officers. But while the micro financing is subject to legislation almost nonexistent in poor countries, we can wonder whether this is also the case in developed countries? [...]

[...] Analysis of micro financing a. This offers several advantages . More than 150 million people excluded from traditional banking systems, now have access to financial services such as microcredit or savings. It's an advantage economically and socially. (Economic and Social Plan) Well, micro financing offers several services such as micro credit. The microcredit activity encourages micro locally. It drags economy in the country by allowing outlet with those who take initiatives engaging personally, that is to say, businessmen or artisans. [...]

[...] I mean, we move out from the primary purpose of microfinance by Muhammad Yunus. The Indian MFI SKS with a wave of suicides in 2010. The Indians businessmen unable to repay their accumulated loans from different MFIs. Finally, how loan officers are paid (depending on the number of customers in their portfolio and customer reimbursement rates) results in a real harassment loan officers to their clients. After that I have a Note : It should also be noted that another disadvantage is that this concept is not suitable for the "poorest of the poor" because they do not have a minimum of stability required to use a credit. [...]

[...] It's Professor Yunus, founder of Grameen Bank in Bangladesh and Nobel Peace Prize in 2006, popularized internationally microcredit and microfinance, since the end of the 1970s, early 1980s. Under that impulse, many Micro-Finance Institutions (MFI) begin to hatch in developing countries. Today, it is estimated that is the number of MFIs in the world. Currently, only of MFIs are estimated sustainable. I. Role and Presentation a. To. Historical In the 70s, major failures of public policy lending to the poor (India) Existence of non-formal institutions since then(tontine, village lenders) An experience more or less recent (1849 Rhine . ) - 1976: a starting point. [...]

[...] Investors Actually the MF is very profitable and deemed low risk, microcredit is a priori competitive financial market and should attract a growing number of banks, especially the controls, decree by laws, are weak. Thus, the main advantage of microcredit is the improvement of living conditions. But what about the disadvantages? b . Some drawbacks of microfinance The high interest rates for microcredit You know, most of the time, money-lenders practice of abusive rates not seeking economic development, but the financial profitability. For example, as you can see from the slide, it is about 126% in Nigeria Thus the borrower accumulates borrowings increasing rates to pay off previous loans. [...]