The Akiba Mashinani Trust, Kenya: a local fund’s role in urban development

This paper describes the funding and financial services provided by the Akiba Mashinani Trust (AMT) to support the Kenyan Homeless People’s Federation (Muungano wa Wanavijiji). Muungano is a federation of autonomous savings groups with over 60,000 members from informal settlements across Kenya. Savings are critical because they enable wealth accumulation, demonstrate the capacity of the community to repay loans and hence leverage additional resources, and build social capital among members. AMT is able to use these savings as seed capital for revolving funds at the community, city and national scales. The funds offer informal settlers a range of financial products, including community project loans, which allow savings groups to finance social housing, sanitation and basic infrastructure in an affordable way. Therefore, unlike formal banking and microfinance institutions, AMT positions its financial services within a broader effort to improve the physical and social fabric of urban informal settlements. The experiences of Muungano and AMT demonstrate the catalytic impact of establishing appropriate financial services geared towards low-income groups – and crucially, how the savings of low-income people can leverage government resources to achieve more inclusive cities.

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A Study on the Sustainability of Microfinance Institutions in Serving the Low-Income Group in Malaysia

TURKISH JOURNAL OF ISLAMIC ECONOMICS ◽

10.26414/a2374 ◽

2021 ◽

Vol 8 (Special Issue) ◽

pp. 339-353

Author(s):

Nur Harena Redzuan ◽

Amir Abidin Bashir

Keyword(s):

Low Income ◽

Income Group ◽

Small Scale ◽

Microfinance Institutions ◽

Poverty Eradication ◽

The People ◽

Start Up ◽

Low Income Groups ◽

The Government ◽

The Impact

A microfinance scheme was introduced in Malaysia in the year 1987 as one of the alternatives to poverty eradication strategies in the country by the government. Since then, several institutions have created to carry out the agenda of providing small loans to the low-income group to start up their small-scale business to generate more sources of income to support their household consumption. However, for a certain reason, the people still do not find microfinance an important tool to uplift their economic positions. Most of the low-income groups are still unaware of this golden opportunity tailored for them. Besides, the sustainability of these subsidized microfinance systems implemented by Malaysia had not been appropriately studied. This study explores the attractiveness of the products offered by microfinance institutions and emphasizes the option that the participants must start utilizing the product. This research also explores microfinance facilities that contain conventional finance element which is prohibited in Islamic trade. The study also discusses the measures and actions taken by microfinance institutions in serving the low-income group in Malaysia. This paper employs a qualitative method through interviews and content analysis. The report, journal publications, and other related documents were also analyzed in achieving the objectives. The study provides the impact that it may pave the way to an indistinct understanding of how Islamic microfinance institutions sustain their operations.

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IMPACTS OF FINANCIAL INCLUSION ON POVERTY AND INCOME INEQUALITY IN DEVELOPING ASIA

The Singapore Economic Review ◽

10.1142/s0217590822440027 ◽

2021 ◽

pp. 1-17

Author(s):

WARATTAYA CHINNAKUM

Keyword(s):

Developing Countries ◽

Income Inequality ◽

Low Income ◽

Financial Services ◽

Trade Openness ◽

Generalized Method Of Moments ◽

Principal Component ◽

Financial Inclusion ◽

Poor Households ◽

Low Income Groups

This study investigates the impacts of financial inclusion on poverty and income inequality in 27 developing countries in Asia during 2004–2019 based on a composite financial inclusion index (FII) constructed using principal component analysis (PCA). The generalized method of moments (GMM) was employed for the estimation. The results show that financial inclusion can influence the reduction in both poverty and income inequality. The empirical findings also reveal the contribution of such control variables as economic growth in decreasing income disparity and trade openness in helping improve the standard of living of poor households despite its tendency to co-vary with income inequality. The present empirical evidence supporting the role of financial inclusion in reducing poverty and income inequality in developing countries has led to a policy implication that financial sector development should focus on the availability, usage, and depth of credit to cover all poor households or low-income groups to help improve their access to financial services, enable them to increase their income, and reduce the income gap between poor and rich households.

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Barriers to Access to and Usage of Financial Services in Ethiopia

Business and Economic Research ◽

10.5296/ber.v7i1.11034 ◽

2017 ◽

Vol 7 (1) ◽

pp. 139 ◽

Cited By ~ 1

Author(s):

K. Sambasiva Rao ◽

Andualem Ufo Baza

Keyword(s):

Low Income ◽

Financial Services ◽

Financial Institution ◽

Fixed Cost ◽

Physical Point ◽

Fixed Charges ◽

Barriers To Access ◽

Financial Exclusion ◽

Low Income Groups ◽

Regulatory Barriers

We study the interplay between financial exclusion and barriers to inclusion. Our model shows that financially excluded individuals are exposed to barriers to inclusion that prohibit their access to financial services even in absence of voluntary exclusion. We call these situation “involuntary exclusion,” since people lack access to and use of financial services due to barriers to inclusion that are otherwise overlooked social exclusion. We show that barriers to inclusion are more likely to occur when lack of access to physical point of financial services, poverty, lack of credit, prohibitive fixed cost of transacting at financial institution, legal and regulatory barriers and low competition among financial institutions. We analyze financial exclusion as a function of barriers to inclusion, examining the trade-off between unbanked adults and barriers to banking. We verify the model’s prediction that financial exclusion is more likely to occur among low income individuals in which assets holdings are low, as well as individuals who are too far away from physical point of access and those individuals who cannot afford bank fixed charges, than others. We also show that individuals are more likely to be financially excluded (relative to others) in low income groups in which barriers to inclusion are more frequent.

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Evaluating the Impact of Microfinance for Women in Albania

Journal of Business Theory and Practice ◽

10.22158/jbtp.v4n2p233 ◽

2016 ◽

Vol 4 (2) ◽

pp. 233

Author(s):

Oltiana Muharremi ◽

Filloreta Madani ◽

Erald Pelari

Keyword(s):

Social Influence ◽

Low Income ◽

Financial Services ◽

Poverty Alleviation ◽

Empirical Investigation ◽

Social Value ◽

Microfinance Institutions ◽

The Poor ◽

The Impact ◽

Micro Enterprises

Microfinance is defined as any activity involving the offering of financial services such as loans, savings and insurance to individuals with low income. Creating social value includes reducing poverty and having a better impact to improve living conditions through capital for micro-enterprises; insurance and savings deposits for reducing risk and boosting consumption. Worldwide microfinance actors promote access to basic financial services by developing new tools, a variety of products and the adoption of an integrated banking access.Initially, microfinance was largely gender neutral: it sought to provide credit to the poor who had no assets to pledge as collateral. It quickly emerged, however, that women invested their business profits in ways that would have a longer-lasting impact on their families and communities. Consequently women became fundamental to the success of the microfinance model as a poverty alleviation tool. The purpose of this article is to examine the impact of microfinance loans in improving the lives of women borrowers, as well as in strengthening their social influence and the microcredit impact in promoting savings. This study is based on an empirical investigation of 384 structured questionnaires and surveys directed at microfinance institutions and their clients in the regions of Vlore and Fier, Albania.

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The Islamic Microfinance System And Its Ultimate Impact On The Poor In Bauchi Metropolis In The Context Of Socio-Economic Challenges

SocioEconomic Challenges ◽

10.21272/sec.5(1).95-101.2021 ◽

2021 ◽

Vol 5 (1) ◽

pp. 95-101

Author(s):

Hashim Sabo Bello ◽

Shamsuddeen Abubakar ◽

Sunusi Abdulkadir Fateh

Keyword(s):

Social Services ◽

Low Income ◽

Financial Services ◽

Poor People ◽

Microfinance Institutions ◽

Islamic Microfinance ◽

And Gender ◽

High Level ◽

Financial Transactions ◽

The Impact

One of the conditions for providing social services to the population, reducing the differentiation of their incomes, as well as reducing poverty is to provide equal access to financial services for all segments of the population. Despite high unemployment and a significant number of poor people, only about a few thousand Nigerians today use Islamic microfinance services. The main purpose of this study is to study the impact of the Islamic microfinance system on the financial situation of the population. The study is based on the principles of the theory of positivism. Methods of deduction, statistical analysis, and survey served as methodological tools. The authors of the article developed a structured questionnaire, the analysis of which allowed to analyze the attitude of citizens to Islamic microfinance services. A representative sample of citizens of the metropolis Bauchi with different levels of wealth, age and gender was selected for the study. According to the results of the survey, the development of special microcredit programs for low-income people allowed to finance the start of their own business, thus providing their own and household members’ employment. The main factors hindering the development of microfinance in Muslim countries are the high level of non-repayment of borrowed funds, imperfect infrastructure, the presence of Sharia bans on certain types of financial transactions. The results of the study showed the need for an active information campaign aimed at explaining the benefits of using macro-financial services and their accessibility for low-income citizens, as well as expanding the network of microfinance institutions throughout the metropolis. These measures will create conditions for the development of small business in the country, and as a consequence reduce poverty and reduce the number of unemployed in the country.

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Predicting The Impact of Commercialization Factors on The Social Mission of Islamic Microfinance Institutions for Muslim Community

Islam Realitas Journal of Islamic & Social Studies ◽

10.30983/islam_realitas.v6i1.3095 ◽

2020 ◽

Vol 6 (1) ◽

pp. 14

Author(s):

Hesi Eka Puteri

Keyword(s):

Low Income ◽

Financial Services ◽

Quantitative Research ◽

Social Performance ◽

Microfinance Institutions ◽

Muslim Community ◽

Social Mission ◽

The Social ◽

Community Banking ◽

The Impact

As a community banking operating in Islamic principles, Islamic rural banks are faced with two performance targets namely financial performance and social performance which are both interrelated. This study examined the impact of commercialization factors covering profitability, regulation, and competition on the social performance of Islamic rural banks. This study was quantitative research based on a survey on six units of Islamic rural banks in West Sumatera province of Indonesia from 2012 to 2018. Data collected from the publication of financial services authority and other financial documents at Islamic rural banks then analyzed with panel data regression. The findings of this research showed that profitability and competition influenced social performance. Meanwhile, there was no regulation’s impact on social performance. Regulatory factors that were initially expected to strengthen the social responsibility mission of Islamic rural banks, did not stimulate the increase of social performance. This study reveals the importance of the commercialization factor in improving the social performance of Islamic rural banks by increasing the social benefits through providing financial services for the low-income Muslim community. Sebagai sebuah community banking yang beroperasi dalam prinsip-prinsip Islam, BPR Syariah dihadapkan pada dua target kinerja yaitu kinerja keuangan dan kinerja sosial yang keduanya saling terkait. Penelitian ini bertujuan untuk menguji dampak dari faktor-faktor komersialisasi yang meliputi profitabilitas, regulasi dan kompetisi terhadap kinerja sosial BPR Syariah. Penelitian ini menggunakan pendekatan kuantitatif berdasarkan survei pada enam unit BPR Syariah di provinsi Sumatera Barat Indonesia dari tahun 2012 hingga 2018. Data dikumpulkan dari publikasi Otoritas Jasa Keuangan dan dokumen keuangan lainnya di BPR Syariah kemudian dianalisis dengan regresi data panel. Hasil penelitian ini menunjukkan bahwa profitabilitas dan persaingan berpengaruh terhadap kinerja sosial, sedangkan regulasi tidak berpengaruh terhadap kinerja sosial. Faktor regulasi yang semula diharapkan memperkuat misi tanggung jawab sosial BPR syariah, ternyata tidak merangsang peningkatan kinerja sosial. Studi ini mengungkap akan pentingnya faktor komersialisasi dalam meningkatkan kinerja sosial BPR syariah dengan meningkatkan manfaat sosial melalui pemberian layanan keuangan untuk masyarakat muslim berpenghasilan rendah.

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A Legal Analysis of the Use of Innovative Technology in the Promotion of Financial Inclusion for Low-Income Earners in South Africa

Potchefstroom Electronic Law Journal/Potchefstroomse Elektroniese Regsblad ◽

10.17159/1727-3781/2021/v24i0a10740 ◽

2021 ◽

Vol 24 ◽

pp. 1-27

Author(s):

Howard Chitimira ◽

Phemelo Magau

Keyword(s):

South Africa ◽

Financial Institutions ◽

Low Income ◽

Rural Areas ◽

Financial Services ◽

Informal Settlements ◽

Financial Inclusion ◽

Innovative Technology ◽

Financial Exclusion ◽

The Government

The promotion of financial inclusion is important for the combating of financial exclusion in many countries, including South Africa. Nonetheless, most low-income earners living in rural areas and informal settlements are still struggling to gain access to basic financial products and financial services in South Africa. This status quo has been caused by a number of factors such as the absence of an adequate financial inclusion policy, the geographical remoteness of financial institutions to most low-income earners, rigid identity documentary requirements, a lack of access to reliable and affordable Internet connection by low-income earners living in informal settlements and rural areas, a lack of financial illiteracy, the high costs of financial services, unemployment and poverty, over-indebtedness, and cultural and psychological hindrances to low-income earners in South Africa. Consequently, these factors have somewhat limited the access to financial services offered by financial institutions to low-income earners living in rural areas and informal settlements. In many countries, including South Africa, the financial sector is relying on innovative technology, especially in banking institutions, to aid in the offering of financial services to their customers. It is against this background that this article discusses selected legal and related challenges affecting the regulation and use of innovative technology to promote financial inclusion for low-income earners in South Africa. The article further discusses possible measures that could be adopted by the government, financial institutions and other relevant regulatory bodies to promote the use of innovative technology to combat the financial exclusion of low-income earners in South Africa.

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PROGRESS OF FINANCIAL INCLUSION THROUGH FIPs OF SCHEDULED COMMERCIAL BANKS

International Journal of Research -GRANTHAALAYAH ◽

10.29121/granthaalayah.v5.i8.2017.2202 ◽

2017 ◽

Vol 5 (8) ◽

pp. 146-157

Author(s):

Mohana Krishna Irrinki ◽

Kuberudu Burlakanti

Keyword(s):

Low Income ◽

Financial Services ◽

Banking Sector ◽

Credit Cards ◽

Vital Role ◽

Financial Inclusion ◽

Inclusive Growth ◽

Continuous Growth ◽

Low Income Groups ◽

Bank Accounts

All the stakeholders of the economy had identified the need and importance of financial inclusion in the overall development of any country. Banking sector plays a very vital role in the success of financial inclusion. Government and RBI had formulated various programs, schemes and financial services for the financial betterment of the low income groups. Various initiations were taken in implementing financial inclusion and banks were asked to set self-regulated targets through financial inclusion plans through which the unbanked villages across the country were assigned to various banks and these banks were asked to bring all the unbanked segments into the banking fold. The paper aims at the evaluation of financial inclusion through the various parameters considered for the growth of financial inclusion. The banks through the efforts of their branches and Business Correspondents have seen the continuous growth in opening the bank accounts, issue of Kisan Credit Cards & General Credit Cards and the volume and value of transactions in the bank accounts. Financial Inclusion Plans of the banks are helping a lot in moving towards inclusive growth.

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Co-Production Related To Business Counselling in the Microfinance Sector as a Demonstration of Social Cooperation: An Interpersonal Relationship Approach

SocioEconomic Challenges ◽

10.21272/sec.4(2).56-66.2020 ◽

2020 ◽

Vol 4 (2) ◽

pp. 56-66

Author(s):

Ruwan Abeysekera

Keyword(s):

Interpersonal Relationships ◽

Low Income ◽

Financial Services ◽

Interpersonal Relationship ◽

Organizational Factors ◽

Management Training ◽

Business Development ◽

Sri Lankan ◽

Microfinance Institutions ◽

Counseling Intervention

Microfinance Institutions (MFIs) provide services such as microcredit, savings, insurance, and Business Development Services (BDS) to low-income people in order to start new businesses and expand existing businesses. MFIs cater to micro-enterprises. A microenterprise is defined as an owner-managed business that has fewer than 10 employees. The studies show that microenterprises not only need microcredit but also BDS in order to grow their businesses. This study focuses on BDS. BDS are non-financial services such as management training, vocational training skills, marketing assistance, and technology access provided to owner-managers by MFIs. MFIs could provide BDS to owner-managers/clients using business counseling. A good relationship between the counselor and the client can be considered a defining feature of any successful counseling intervention. This interpersonal relationship enhances the co-production of BDS in counseling. Therein, the objectives of this study are; to identify the factors that enhance the interpersonal relationship between the counselor and the client in microfinance settings that result in enhanced co-production, to identify how interpersonal relationships enhance co-production, and to understand how organizational factors affect interpersonal relationships. The multiple case study method was used to conduct the study and six (6) Sri Lankan Microfinance Institutions (MFIs) were chosen as cases and data were collected by holding in-depth interviews. Findings show that factors such as the expertise of the counselors, social interaction, similar attitudes, intensity of contacts, and power distance influence the relationship between the counselors and the clients. As a result of the enhanced interpersonal relationships between counselor and client, parties exchange personal and communal favors thereby further enhancing co-production as well as improving the provision of information by clients. The findings further reveal that interpersonal relationships could be affected by organizational factors such as the type of MFI and type of linkages. Therefore, the findings of this study will enable MFIs to improve the counseling intervention and will further contribute to the microfinance knowledge and practice domains. Keywords: interpersonal relationship, co-production, counseling, microfinance, business development services (BDS).

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Stochastic model of microcredit interest rate in Morocco

Risk Governance and Control Financial Markets & Institutions ◽

10.22495/rgcv6i4c2art3 ◽

2016 ◽

Vol 6 (4) ◽

pp. 268-273 ◽

Cited By ~ 1

Author(s):

Ghita Bennouna ◽

Mohamed Tkiouat

Keyword(s):

Interest Rate ◽

Stochastic Model ◽

Interest Rates ◽

Low Income ◽

Financial Services ◽

Banking System ◽

Well Being ◽

Microfinance Institutions ◽

Social Mission ◽

The Interest Rate

Access to microcredit can have a beneficial effect on the well-being of low-income households excluded from the traditional banking system. It allows this population to receive affordable financial services to help them to meet their needs and to improve their living conditions. However to provide access to credit, microfinance institutions should ensure not only their social mission but also commercial and financial mission to enable the institution to perpetuate and become self-sufficient. To this end, MFIs (microfinance institutions) must apply an interest rate that covers their costs and risk, while generating profits, Also microentrepreneurs need, to this end, to ensure the profitability of their activities. This paper presents the microfinance sector in Morocco. It focuses then on the interest rate applied by the Moroccan microfinance institutions; it provides also a comparative study between Morocco and other comparable countries in terms of interest rates charged to borrowers. Finally, this article presents a stochastic model of the interest rate in microcredit built in random loan repayment periods and on a real example of the program of loans of microfinance institution in Morocco.

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