Remittances and financial institutions: is there a causal linkage?

2015 ◽  
Vol 15 (2) ◽  
Author(s):  
Alberto Posso
Keyword(s):  
Developing Countries ◽  
Financial Institutions ◽  
Financial Services ◽  
Development Process ◽  
Home Country ◽  
Microfinance Institutions ◽  
Reverse Effect ◽  
Future Income ◽  
Key Driver ◽  
Migrant Remittances

AbstractThe extant literature indicates that remittance inflows from developed to developing countries provide liquidity for domestic financial institutions, which aids in the development process. However, the reverse effect has been neglected. This paper tests whether more financial services and opportunities in the home country attract remittances to developing countries. It addresses this hypothesis using a dataset of 72 developing countries over the period 1997–2011. The paper finds evidence that remittance inflows are driven by increased availability of domestic financial services. In particular, the presence of microfinance institutions is found to be a key driver in stimulating migrant remittances. These findings, perhaps, suggest that remittance-sending migrants may not be altruistic and send remittances to maximize their own future income. Alternatively, the results suggest that microfinance organizations have been successful in attracting remittances by lowering transaction costs and proving linked services.

The Role of Mobile Money in Moderating Financial Exclusion: A Tanzanian Experience

2020 ◽  
Vol 2 ◽  
pp. 1-24 ◽  
Author(s):  
Deogratius Joseph Mhella
Keyword(s):  
Developing Countries ◽  
Financial Institutions ◽  
Banking Sector ◽  
Research Question ◽  
Microfinance Institutions ◽  
Mobile Money ◽  
Access To Credit ◽  
Financial Exclusion

Prior to the advent of mobile money, the banking sector in most of the developing countries excluded certain segments of the population. The excluded populations were deemed as a risk to the banking sector. The banking sector did not work with cash stripped and the financially disenfranchised people. Financial exclusion persisted to incredibly higher levels. Those excluded did not have: bank accounts, savings in financial institutions, access to credit, loan and insurance services. The advent of mobile money moderated the very factors of financial exclusion that the banks failed to resolve. This paper explains how mobile money moderates the factors of financial exclusion that the banks and microfinance institutions have always failed to moderate. The paper seeks to answer the following research question: 'How has mobile money moderated the factors of financial exclusion that other financial institutions failed to resolve between 1960 and 2008? Tanzania has been chosen as a case study to show how mobile has succeeded in moderating financial exclusion in the period after 2008.

scholarly journals The impact of social media on the performance of microfinance institutions in developing countries: a quantitative approach

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ahmad Daowd ◽  
Muhammad Mustafa Kamal ◽  
Tillal Eldabi ◽  
Ruaa Hasan ◽  
Farouk Missi ◽  
...  
Keyword(s):  
Social Media ◽  
Developing Countries ◽  
Performance Indicators ◽  
Financial Services ◽  
Microfinance Institutions ◽  
Poverty Level ◽  
Content Type ◽  
Media Platform ◽  
Media Applications ◽  
The Impact

PurposeOver the last few decades, microfinance industry is argued to have played a constructive role in alleviating poverty level and providing the underprivileged with access to financial services. Statistics from the World Bank reveal that, currently, only 4% of the underprivileged have been served out of the 3 billion+ potential clients. Such results are due to several claims, particularly the operational and financial challenges faced by microfinance institutions (MFIs) in the constant flux inviting more attentions towards its performance. While explicit attention is given by many researchers towards mobile banking and information and communication technology (ICT) in improving the MFIs’ performance, the study on how social media, as a rapidly growing online phenomenon, can impact on the MFIs’ performance remains scarce. As such, this study aims to investigate this impact based on four dimensional performance indicators: efficiency, financial sustainability, portfolio quality and outreach.Design/methodology/approachA model is proposed and tested to ascertain the relationship between social media applications and organisational performance. In so doing, web-based questionnaires have been used to collect data from MFI employees in developing countries. Results reveal a significant influence of the social media over the MFIs’ performance, offering valuable insights into both researchers and practitioners in the domain of microfinance, as well as social media—conforming that the adoption of social media as marketing, advertising and communication tools may significantly improve the MFIs’ performance.FindingsThe results demonstrate that there is a positive and significant impact of social media use within microfinance on the key indicators of MFIs. They also show that the highest impact of social media usage within the microfinance is on the portfolio quality. In addition, it was found that marketing and advertising; communication and sales and distribution are the main areas where social media is able to support while social networking websites are the most popular platforms employed in MFIs.Originality/valueThis study adds to the existing literature few theoretical and practical aspects. First, this study developed a model for assessing the value of social media as a new phenomenon within this type of organisation. Second, it offers microfinance sponsors, managers and policy makers with a frame of reference to understand what social media platform can be deployed for each purpose. Third, with the identification of the main MFIs’ performance indicators, this research provided a reference of performance measurement guide for microfinance industry when assessing different technological employment.

Exploring the Role of Microfinance in Emerging Nations

2021 ◽  
pp. 249-268
Author(s):  
Kijpokin Kasemsap
Keyword(s):  
Health Care ◽  
Interest Rates ◽  
Financial Institutions ◽  
Financial Services ◽  
Financial Resources ◽  
Rural Poor ◽  
Microfinance Institutions ◽  
Emerging Nations ◽  
Poor Households

This chapter explains the overview of microfinance; the efficiency of microfinance institutions (MFIs) and sustainability; microfinance and interest rates; microfinance and information technology (IT); microfinance, social capital, trust, and repayment rates; microfinance and health care; informal microfinance institutions (IMFIs) and tourism entrepreneurship; and the importance of microfinance in emerging nations. Financial services provide a method for people and businesses to obtain credit and manage available assets on a continuous basis. Microfinance has a significant role in bridging the gap between formal financial institutions and rural poor households. MFIs can access financial resources from banks and other financial institutions and provide financial services to poor households. The chapter argues that promoting microfinance has the potential to enhance financial performance and reach economic goals in emerging nations.

MICROFINANCE INSTITUTIONS: A PROFITABLE INVESTMENT ALTERNATIVE?

2012 ◽  
Vol 17 (04) ◽  
pp. 1250024 ◽  
Author(s):  
NOEL D. CAMPBELL ◽  
TAMMY M. ROGERS
Keyword(s):  
Developing Countries ◽  
Financial Institutions ◽  
Capital Markets ◽  
Commercial Banks ◽  
Microfinance Institutions ◽  
External Funding ◽  
Operating Expense ◽  
Return On Equity ◽  
Macroeconomic Conditions ◽  
Country Specific

This paper examines the determinants of return on equity for microfinance institutions (MFI), an important source of funds for entrepreneurs in developing countries. Recent research indicates that MFIs need to become financially sustainable without relying on external funding. To meet this objective, MFIs have begun to look to the capital markets as a source of funds. Our findings indicate that investors in MFIs can look at measures similar to those used by traditional financial institutions, like commercial banks, such as operating expense and portfolio yield measures to measure possible performance of a MFI. MFIs that have a larger percentage of women borrowers fare better. Additionally, we find that country specific macroeconomic conditions affect MFI return.

scholarly journals Securitization: An Alternative Funding Mechanism for the Microfinance Institutions

2018 ◽  
Vol 3 (2) ◽  
pp. 1
Author(s):  
Shahadat Hossain ◽  
Rubaiyet Hasan Khan
Keyword(s):  
Developing Countries ◽  
Financial Services ◽  
Poor People ◽  
Microfinance Institutions ◽  
Cross Border ◽  
Alternative Funding ◽  
Funding Mechanism ◽  
The Poor

Despite microfinance has been widely appreciated as an informal financial mechanism to provide financial services to the poor people in developing countries, this sector is still lacking behind in fulfilling the demand gap due to the dearth of adequate funds. Securitization opens a new horizon that overcomes the funding barriers of microfinance through which the top tier Microfinance Institutions (MFIs) can accumulate funds to enlarge their portfolio without issuing any debt or equity. This paper is a desk study that synthesizes how securitization can be used in the funding of the MFI portfolio and what are the benefits and risks associated with securitization of microfinance portfolio. As a case study, we use the two examples of cross-border securitizations in the microfinance industry to diagnose the role of securitization in microfinance.

Mobile Financial Services in Emerging Countries

2018 ◽  
pp. 109-128 ◽  
Author(s):  
Joseph Kwame Adjei ◽  
Solomon Odei-Appiah
Keyword(s):  
Developing Countries ◽  
Technology Adoption ◽  
Financial Institutions ◽  
Financial Services ◽  
Emerging Countries ◽  
Major Barrier ◽  
Regulatory Issues ◽  
Bus Driver ◽  
Mobile Financial Services ◽  
Financial Transactions

This chapter describes a recent World Bank report which indicated a sizable percentage of households in developing countries do not have access to formal accounts with financial institutions. The situation has created a major barrier in the quest for a world without poverty due to the exclusion of segments of society from the formal financial system. The phenomenon has resulted in the exclusion of many from traditional financial services, thus the use of other means to conduct informal financial transactions. In Ghana, many households rely on domestic informal forms of remittance to relatives and payments. Such informal mediums of remitting money to and from relatives in Ghana (e.g. via “Bus Driver”) received wide patronage irrespective of the associated risks until mobile financial services were introduced. This chapter discussed Mobile Financial Services (MFS) from the perspective of emerging economy and treats the following topics; technology, adoption and the regulatory issues in MFS.

Reducing Poverty and Sustaining Growth

2019 ◽  
pp. 773-792
Author(s):  
Nabila Nisha ◽  
Afrin Rifat
Keyword(s):  
Economic Development ◽  
Developing Country ◽  
Financial Institutions ◽  
Low Income ◽  
Financial Services ◽  
Microfinance Institutions ◽  
Intense Competition ◽  
Development Approach ◽  
Operational Structure ◽  
Micro Credit

Microfinance institutions have been effective rural banking channels that extended financial services to low-income individuals, particularly women in developing country settings. Since its inception, microfinance has evolved as an economic development approach and has grown to enormous scale in Bangladesh, with a reported approximate 23 million borrowers in a country of roughly 150 million people. These numbers reveal the highest population saturation of microfinance in any country. However, with the maturity of the microfinance market in recent years, competition has subsequently increased among various financial and non-financial institutions. Against this backdrop of intense competition, this chapter aims to focus on the current institutions of Bangladesh that has made the microfinance service almost a sole option for the downtrodden segment of the low-income society. In particular, various approaches of microfinance and its operational structure by these institutions including the challenges and attributions of a dynamic micro credit concept will be highlighted.

scholarly journals MODEL OF BUSINESS ACTIVITIESS OF MICROFINANCE INSTITUTIONS IN INDONESIA

2017 ◽  
Vol 2 (2) ◽  
pp. 326
Author(s):  
Etty Mulyati ◽  
Kartikasari Kartikasari ◽  
Rai Mantili ◽  
Nun Harrieti
Keyword(s):  
Financial Institutions ◽  
Low Income ◽  
Financial Services ◽  
Limited Liability ◽  
Business Development ◽  
Community Empowerment ◽  
Microfinance Institutions ◽  
For Profit ◽  
Consulting Services ◽  
Purpose Of Business

Micro Finance Institutions (LKM) as non-bank financial institutions, are growing very rapidly in Indonesia. A very large number and scope of business in villages/sub-districts and sub-districts or districts can play a role in an inclusive financial program. The existence of LKM operation much help expand employment and improve the welfare and improving the economy and productivity of the people, especially low-income communities. The problem is how to model the business activities of LKM in Indonesia. This research will use normative juridical approach method, with analytical descriptive research specification. In an effort to provide financial services, which are intended for low-income communities and do not have access to bank financial institutions. LKM can bridge the problems of micro business access to capital is needed in business development. LKM has a different character with the other financial sector businesses, because it is not solely intended for profit. LKM business activities can be done in a conventional or sharia, includes loan/financing for micro enterprises for capital needs in business development, and management of deposits in an effort to bring awareness to the community's fond of saving, besides that LKM also provide consulting services for the purpose of business development community empowerment. To provide legal certainty for the LKM service user community, LKM institutions are regulated in LKM Laws, according to the law the LKM must be a legal entity of the Cooperative or Limited Liability Company Fostering, regulating, and supervising and licensing of LKM is performed by the Financial Services Authority (OJK). 

scholarly journals The Role Of Mobile Money In Moderating Financial Exclusion: A Tanzanian Experience

2020 ◽  
Vol 9 (2) ◽  
pp. 83-104
Author(s):  
Deogratius Joseph Mhella
Keyword(s):  
Developing Countries ◽  
Financial Institutions ◽  
Banking Sector ◽  
Research Question ◽  
Microfinance Institutions ◽  
Mobile Money ◽  
Access To Credit ◽  
Financial Exclusion

Prior to the advent of mobile money, the banking sector in most of the developing countries excluded certain segments of the population. The excluded populations were deemed as a risk to the banking sector. The banking sector did not work with cash stripped and financially disenfranchised people. Financial exclusion persisted to incredibly higher levels. Those excluded did not have bank accounts, savings in financial institutions, access to credit, loans, and insurance services. The advent of mobile money moderated the very factors of financial exclusion that the banks failed to resolve. This paper explains how mobile money moderates the factors of financial exclusion that the banks and microfinance institutions have always failed to moderate. The paper seeks to answer the following research question: 'How has mobile money moderated the factors of financial exclusion that other financial institutions failed to resolve between 1960 and 2008? Tanzania has been chosen as a case study to show how mobile has succeeded in moderating financial exclusion in the period after 2008.

scholarly journals STRATEGI PENGEMBANGAN LEMBAGA KEUANGAN MIKRO AGRIBISNIS (LKMA) DI KABUPATEN PANDEGLANG

2019 ◽  
Vol 6 (1) ◽  
Author(s):  
Syamsul Hilal ◽  
Ma'mun Sarma ◽  
Lukman M Baga
Keyword(s):  
Local Government ◽  
Development Strategy ◽  
Financial Institutions ◽  
Financial Services ◽  
Institutional Economics ◽  
Central Government ◽  
Microfinance Institutions ◽  
Agricultural Laborers ◽  
Assurance Services ◽  
Fast Procedure

ABSTRACTGabungan Kelompok Tani (Gapoktan) is institutional economics in rural area in which the combined number of farmers' group. Based on the Regulation of the Minister of Agriculture, Gapoktan can perform economic functions. To more effectively manage the funds of PUAP, Gapoktan directed to develop Agribusiness Microfinance Institutions (AMFI). Growth and expansion in Gapoktan PUAP AMFIis strategic step to resolve the question of the financing of small farmers and agricultural laborers during this difficult to get financial services through formal financial institutions and banking. Therefore, the formation AMFI purpose is to; (1) provide assurance services and farmers easier access to financing facilities, (2) a simple and fast procedure, (3) the proximity of the location of the service with the efforts of farmers, (4) operator of AMFI very understanding of the character of farmers as customers. Central government and local government continued to encourage the formation of AMFI on Gapoktan PUAP. The existence AMFI certainly to be hoped by poor farmers in Pandeglang District.The Sum ofGapoktan that has been gained PUAP program until 2012 is 257 Gapoktan. This amount is equivalent to 76.72 percent of the total village in Pandeglang District. However, the number of successful AMFIuntil 2012 only 16 AMFI (6.23%). Total AMFI is certainly not expected. Therefore, this study discusses the performance Gapoktan PUAP, evaluate the process of the formation of the AMFI on  Gapoktan PUAP, and analyze the performance of AMFI. The study and analysis of the material to formulate a development strategy AMFI in Pandeglang District.Keywords: Gapoktan, PUAP, LKMAABSTRAKGapoktan adalah kelembagaan ekonomi di pedesaan yang di dalamnya bergabung beberapa kelompok tani.  Berdasarkan Peraturan Menteri Pertanian, Gapoktan dapat melakukan fungsi-fungsi ekonomi. Untuk lebih mengefektifkan pegelolaan dana PUAP, Gapoktan membentuk Lembaga Keuangan Mikro Agribisnis (LKMA). Penumbuhan dan pengembangan LKMA di dalam Gapoktan PUAP merupakan langkah strategis untuk menyelesaikan persoalan pembiayaan petani kecil dan buruh tani yang selama ini sulit mendapatkan pelayanan keuangan melalui lembaga keuangan formal dan perbankan. Oleh karena itu, tujuan pembentukan LKMA adalah untuk; (1) memberikan kepastian pelayanan serta kemudahan akses petani terhadap fasilitas pembiayaan; (2) prosedur yang sederhana dan cepat; (3) kedekatan lokasi pelayanan dengan tempat usaha petani; (4) pengelola LKMA sangat memahami karakter petani sebagai nasabah. Pemerintah Pusat dan Pemerintah Daerah terus mendorong terbentuknya LKMA pada Gapoktan PUAP. Keberadaan LKMA tentu sangat diharapkan oleh petani miskin di Kabupaten Pandeglang. Jumlah Gapoktan yang telah mendapatkan program PUAP hingga tahun 2012 sebanyak 257 Gapoktan. Jumlah ini setara dengan 76,72 persen dari jumlah desa dan kelurahan di Kabupaten Pandeglang. Namun demikian, jumlah LKMA yang berhasil dibentuk hingga tahun 2012 sebanyak 16 LKMA (6,23%). Jumlah LKMA tersebut tentu tidak sesuai harapan. Oleh karena itu, kajian ini membahas tentang kinerja Gapoktan PUAP, mengevaluasi proses pembentukan LKMA pada Gapoktan PUAP, dan menganalisis kinerja LKMA. Hasil kajian dan analisis tersebut menjadi bahan untuk merumuskan strategi pengembangan LKMA di Kabupaten Pandeglang.Kata kunci: Gapoktan, PUAP, LKMA 

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