Does Offering Microsavings Make Sense for Microfinance Institutions?

2011 ◽  
Vol 56 (2) ◽  
pp. 15-27 ◽  
Author(s):  
Kelley Bergsma
Keyword(s):  
Business Model ◽  
Financial Statements ◽  
Financial Sustainability ◽  
Microfinance Institutions ◽  
Grameen Bank ◽  
Significant Evidence ◽  
The Past ◽  
The Poor ◽  
Core Mission

Within the past decade, two trends have emerged in the global microfinance industry. First, there has been a recent emphasis on financial sustainability. At the same time, microfinance institutions (MFIs) have begun to offer microsavings deposit services to their clients. Could there be a link between these two trends? As MFIs offer savings deposits, do they achieve greater financial sustainability? David Hulme (2008) asserts that Grameen Bank became more financially sustainable after it changed its business model to include microsavings. However, Hulme observes that Grameen Bank also moved away from its poorest clients when it made the shift to savings. This paper explores, as MFIs have switched to offering savings, whether or not MFIs have achieved greater financial sustainability and whether or not they have moved away from their poorest clients. The data examined were collected from the financial statements of Opportunity International MFIs. The results indicate that Opportunity International MFIs that offer microsavings are more financially sustainable than those that do not. Moreover, there is no significant evidence that, by offering microsavings, Opportunity International MFIs have abandoned their poorest clients. Opportunity International MFIs could provide a model of how microfinance institutions can improve their financial sustainability without compromising their core mission to serve the poor.

scholarly journals Microfinance Meets the Market

2009 ◽  
Vol 23 (1) ◽  
pp. 167-192 ◽  
Author(s):  
Robert Cull ◽  
Asli Demirgüç-Kunt ◽  
Jonathan Morduch
Keyword(s):  
Interest Rates ◽  
Business Model ◽  
Microfinance Institutions ◽  
Social Business ◽  
Grameen Bank ◽  
Large Dataset ◽  
For Profit ◽  
The Future ◽  
Massive Scale ◽  
Single Path

In this paper, we examine the economic logic behind microfinance institutions and consider the movement from socially oriented nonprofit microfinance institutions to for- profit microfinance. Drawing on a large dataset that includes most of the world's leading microfinance institutions, we explore eight questions about the microfinance “industry”: Who are the lenders? How widespread is profitability? Are loans in fact repaid at the high rates advertised? Who are the customers? Why are interest rates so high? Are profits high enough to attract profit-maximizing investors? How important are subsidies? The evidence suggests that investors seeking pure profits would have little interest in most of the institutions we see that are now serving poorer customers. We will suggest that the future of microfinance is unlikely to follow a single path. The recent clash between supporters of profit-driven Banco Compartamos and of the Grameen Bank with its “social business” model offers us a false choice. Commercial investment is necessary to fund the continued expansion of microfinance, but institutions with strong social missions, many taking advantage of subsidies, remain best placed to reach and serve the poorest customers, and some are doing so at a massive scale. The market is a powerful force, but it cannot fill all gaps.

scholarly journals A Survey of Literature on the Sustainability of Grameen Bank

2008 ◽  
pp. 71-88
Author(s):  
Mamunur Rashid ◽  
Dr. Taslima Begum ◽  
Md. Mizanur Rahman ◽  
Md. Monimul Haque
Keyword(s):  
Poverty Alleviation ◽  
Secondary Data ◽  
Operating Costs ◽  
Living Standard ◽  
Financial Sustainability ◽  
Rural Poor ◽  
Microfinance Institutions ◽  
Grameen Bank ◽  
Group Lending ◽  
Soft Term

This paper is designed to survey the existing literatures on the issue of financial sustainability of microfinance institutions working with group-lending approach. The paper is based on secondary data and information. The most highlighted feature of microfinance program is embodied in the innovation of group-lending approach introduced by the Grameen Bank (GB) in Bangladesh. Even though most of the micro­finance institutions have their striking results of reaching to the poorest borrowers with high repayment rates, most of them are, however, still dependent on the subsidized or soft-term loans. Grameen Bank, with all its success in poverty alleviation and in increasing living standard of the rural poor, is yet to achieve financial sustainability to a fullest form. Should it increase the lending rate, should it reduce its operating costs to a greater extent, or should it try to diversify its investment, or should it try to mobilize savings as a base for re-lending? All these questions are still open for further research and planning.

Depth of Outreach and Financial Sustainability of Microfinance Institutions

2020 ◽  
pp. 204-218 ◽  
Author(s):  
Mohammad Zainuddin ◽  
Ida Md. Yasin ◽  
Masnun Mahi ◽  
Shabiha Akter
Keyword(s):  
Research Question ◽  
Financial Sustainability ◽  
Microfinance Institutions ◽  
Donor Funding ◽  
Trade Off ◽  
The Poor ◽  
Social Objective

Microfinance institutions tend to rely on donations and subsidies to achieve their social objective of outreach to the poor. Over the years, the industry has experienced tremendous growth, with donor funding pouring in. The question, however, arises whether microfinance firms can operate and continue to serve the poor clients on cost-covering basis without ongoing subsidies. There has been a growing tendency in the industry, which was traditionally a domain of not-for-profits, to embrace commercialization and pursue profitability to ensure self-sustainability. This chapter makes an empirical revisit to an inconclusive research question: Is there a trade-off between microfinance outreach and sustainability? Based on data for 1,232 microfinance firms from 43 countries, the study confirms the existence of trade-off between the two bottom lines of microfinance.

scholarly journals PENGARUH KEDALAMAN JANGKAUAN PEMBIAYAAN TERHADAP KEBERLANJUTAN KEUANGAN LEMBAGA KEUANGAN MIKRO SYARIAH

2019 ◽  
Vol 4 (1) ◽  
pp. 15
Author(s):  
RAMEL YANUARTA RE ◽  
HULWATI HULWATI ◽  
ROZALINDA ROZALINDA
Keyword(s):  
Regression Models ◽  
Financial Statements ◽  
Financial Sustainability ◽  
Microfinance Institutions ◽  
Return On Assets ◽  
Average Value ◽  
Urban Village ◽  
Poor Households ◽  
Dependent Variables ◽  
Multiple Regression Models

Analysis of the sustainability of the microfinance institutions cannot be separated from its outreach. This study aims to analyze the effect of the depth of outreach on financial sustainability in the Koperasi Jasa Keuangan Sharia Baitul Maal wa Tamwil (KJKS BMT) kelurahan Kota Padang. This study is an analysis of causality. The analysis was carried out for two years of financial statements, 2014 and 2015. Samples were taken using a purposive sampling approach. The financial sustainability issues are analyzed with two variables, namely return on assets (ROA) and non-performing financing (NPF) which are used as dependent variables in multiple regression models. As independent variables, the average value of financing provided by the KJKS BMT kelurahan Kota Padang is used as a proxy for the level of the depth of outreach and several other control variables. The results of this study reveal that there is a trade-off between the depth of outreach from financing services to poor households to the BMT KJKS kelurahan Kota Padang and financial sustainability as is the case in conventional microfinance institutions. So, naturally in practice there will be reluctance in the KJKS of BMT Kota Padang urban village to provide financing services to poor households because of their negative financial performance.

scholarly journals Financial sustainability of Tanzanian saving and credit cooperatives

2015 ◽  
Vol 42 (10) ◽  
pp. 870-887 ◽  
Author(s):  
Nyankomo Marwa ◽  
Meshach Aziakpono
Keyword(s):  
Financial Statements ◽  
Total Sample ◽  
Empirical Literature ◽  
Alternative Form ◽  
Financial Sustainability ◽  
Data Set ◽  
Financial Reports ◽  
Content Type ◽  
The Poor ◽  
Credit Cooperatives

Purpose – The purpose of this paper is to discuss the financial sustainability of Tanzanian saving and credit cooperatives (SACCOs). Design/methodology/approach – The data set used in this study comes from SACCOs’ audited financial reports for the year 2011. The performance was estimated using return on asset (ROA) and financial sustainability was estimated using the ratio of total expenses to total revenue. Linear regression was used to investigate the determinants of financial sustainability. Findings – The results show that, about 61 per cent of the sample SACCOs is operationally sustainable and 51 per cent of the total sample is both operationally and financially sustainable. The average sustainability score was 127 per cent. On average, the results for profitability (measured by ROA) is higher than some of the results reported for standard microfinance in the region and globally. In terms of sustainability the result forecasts a promising future for financial cooperative business model as an alternative form of financing the poor. Research limitations/implications – Only SACCOs with audited financial statements were included in the study, thus the conclusion is limited to SACCOs with similar characteristics. Future work might consider extending the analysis to include SACCOs with non-audited financial statements. Practical implications – Based on the sample SACCOs can under good management can be used as a sustainable social conduit for financial access and social economic development among the poor in Tanzania. Originality/value – This study contributes in two ways. First, it contributes towards the scanty empirical literature on the performance of SACCOs in developing countries and in Tanzania in particular. Second, it provides provocative evidence which appears to contradict earlier and more pessimistic accounts and it challenges the ontology about extending member-based microfinance.

scholarly journals Determinants of Financial Sustainability for Microfinance Institutions: Lessons for Islamic Microfinance Banks in Nigeria

2021 ◽  
Vol 8 (Special Issue) ◽  
pp. 301-320
Author(s):  
Abdurrahman Abdullahi ◽  
Anwar Hasan Abdullah Othman
Keyword(s):  
Capital Structure ◽  
Financial Services ◽  
Financial Sustainability ◽  
Microfinance Institutions ◽  
The Poor ◽  
Research Findings ◽  
Islamic Microfinance ◽  
Asset Size ◽  
Good Risk ◽  
Economic And Financial Crisis

Islamic microfinance institutions play a major role in the provision of financial services to the poor and underprivileged through non-interest, equity-based products and services. To achieve these critical objectives, however, they need to be financially sustainable, which is threatened by the current economic and financial crisis caused by the Covid-19 pandemic. The objective of this paper is to review the determinants of financial sustainability of microfinance institutions with a view to drawing lessons for Islamic microfinance banks in Nigeria. The paper utilized the literature review methodology to synthesize research findings in the area. The review revealed that the major determinants of financial sustainability of microfinance institutions are the capital structure, asset size, and financial innovation. Others are good risk management and corporate governance frameworks. The paper thus recommended that Islamic microfinance institutions in Nigeria should maintain a robust capital structure that relies more on equity, a lean but diversified Board, and utilize more technology-based services. Most importantly, they should emphasize profit and loss sharing principles in their operations.

scholarly journals TARGETING THE POOR VERSUS FINANCIAL SUSTAINABILITY AND EXTERNAL FUNDING: EVIDENCE OF MICROFINANCE INSTITUTIONS IN GHANA

2012 ◽  
Vol 17 (03) ◽  
pp. 1250016 ◽  
Author(s):  
SAMUEL KOBINA ANNIM
Keyword(s):  
Regression Analysis ◽  
Development Strategies ◽  
Financial Resources ◽  
Financial Sustainability ◽  
Microfinance Institutions ◽  
External Funding ◽  
The Poor ◽  
Self Sufficiency ◽  
Using Data ◽  
Type Of Institution

This study tests the hypotheses that: (i) formal microfinance institutions (MFIs) using their own mobilized financial resources (based on owners' equity, commercial lending or deposits) for on-lending reach non-poor clients and (ii) concentrating on the achievement of financial sustainability causes an institution to target non-poor clients. Using data on 2,691 MFI clients and non-clients from Ghana, we revisit the microfinance argument of serving poorer clients and sustainability, and in addition examine the effect of the source of funds and type of institution on the financial and social objectives of MFIs. Following the correction of endogeneity, our regression analysis shows that unlike financial self-sufficiency, MFIs that are only operationally self-sufficient reach poorer clients, and also, formal institutions dispensing their own funds target non-poor clients. The latter finding suggests the importance of complementary development strategies and a deliberate harmonization of microfinance interventions, irrespective of the source of funds.

scholarly journals WOMEN EMPOWERMENT THROUGH MICRO CREDIT USING GRAMEEN BANK SYSTEM

2019 ◽  
Vol 3 (1) ◽  
pp. 56-68
Author(s):  
Dwi Indah Kartika
Keyword(s):  
Low Income ◽  
Small Businesses ◽  
Women Empowerment ◽  
Microfinance Institutions ◽  
Grameen Bank ◽  
Access To Credit ◽  
The Poor ◽  
Productive Activities ◽  
Bank System ◽  
Micro Credit

This paper discussed the process of women empowerment through micro credit using Grameen Bank System. Poverty is not only in the sense of the condition of low income or economic inability, but furthermore is welfare resources exclusion which resulted in a group of people who unable to reach facilities of health, educational, are not able to obtain basic rights, have no pride, confidence, and so on. Women are mostly experience poverty and powerless to decide their own life’s choices. Women often have difficulty in getting facilities and a decent living as a man. This condition marginalizes women’s rights in case of social and economy. In addition to its economy background, women are also limited in gaining access to information, education and political participation. Microfinance is a tool that provides loans in a small amount to poor families in order to assist them doing productive activities and grow their small businesses. During this time, the poor do not have access to credit from conventional banks because they do not have money or goods that can be used as collateral or guarantee. Microcredit are usually offered without collateral to individuals or through group savings and loans. Microfinance clients are people with low incomes who do not have access to formal financial institutions such as conventional banking. Women empowerment through micro credit aimed to open women’s financial access. Women are the target of microfinance because of characteristic and her nature. Microcredit using Grameen Bank System is one form of microfinance institutions that distributes capital to the poor in order to be used as capital asset in running their productive activities where women as the target. Giving training and broaden skills to poor women are one of the stages of this program.  Keywords: poverty, micro finance, women empowerment.

High-Resolution, Low-Voltage SEM of Cell Wall Regeneration of Yeast Shizosaccharomyces Pombe Protoplasts

1988 ◽  
Vol 46 ◽  
pp. 208-211
Author(s):  
M. Osumi ◽  
N. Yamada ◽  
T. Nagatani
Keyword(s):  
Electron Microscope ◽  
Scanning Electron Microscope ◽  
Low Voltage ◽  
Cell Wall Regeneration ◽  
The Past ◽  
The Poor ◽  
Probe Size ◽  
Beam Damage ◽  
Biological Field ◽  
Scanning Electron

Even though many early workers had suggested the use of lower voltages to increase topographic contrast and to reduce specimen charging and beam damage, we did not usually operate in the conventional scanning electron microscope at low voltage because of the poor resolution, especially of bioligical specimens. However, the development of the “in-lens” field emission scanning electron microscope (FESEM) has led to marked inprovement in resolution, especially in the range of 1-5 kV, within the past year. The probe size has been cumulated to be 0.7nm in diameter at 30kV and about 3nm at 1kV. We have been trying to develop techniques to use this in-lens FESEM at low voltage (LVSEM) for direct observation of totally uncoated biological specimens and have developed the LVSEM method for the biological field.

Effects of Financial Innovations on Profitability for Deposit Taking Microfinancing Institutions in Kenya

2018 ◽  
Vol 9 (6) ◽  
pp. 529-536
Author(s):  
Martin Khoya Odipo ◽  
Keyword(s):  
Financial Institutions ◽  
Positive Relationship ◽  
Financial Institution ◽  
Secondary Data ◽  
Financial Statements ◽  
Descriptive Statistics ◽  
Primary Data ◽  
Microfinance Institutions ◽  
Financial Innovations ◽  
Strong Positive Relationship

Recent studies have documented that innovations improve profitability of firms. This article documents that deposit taking micro financial institutions that have adopted financial innovations have increased their profitability. The study covered five years between 2009-2013. Both primary and secondary data were used in the study. Primary data was obtained through administration of drop and pick questionnaires to selected employees of the institutions. Secondary data was obtained from financial statements and management reports of these deposit taking microfinance institutions. Data was analyzed using descriptive statistics, return on asset and multi-liner regression model to determine the effect of each financial innovation applied on profitability on the micro-financial institution. The results showed that most deposit taking microfinance institutions adopted these financial innovations in their current operations. There was strong positive relationship between individual innovations and profitability. In line with profitability ROA also showed improvement each year after the adoption of these financial innovations.

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