Premium Essay

Success of Microfinance in Bangladesh: Its Determinants, Impacts & Challenges

In: Business and Management

Submitted By voboghure
Words 21504
Pages 87
Success of Microfinance in Bangladesh:
Its Determinants, Impacts & Challenges

Chapter- One

Introduction

1.1 Introduction:
In recent years, microcredit, in its wider dimension known as microfinance, has become a much favored intervention for poverty alleviation in the developing countries and least development countries. There is scarcely a poor country and development oriented donor agency (multilateral, bilateral and private) not involved in the promotion (in one form or other) of a microfinance program. Microfinance programs claim many achievements as its impact and an outside observer cannot but wonder at the range of diversity of the benefits claimed.

Although Bangladesh has huge potential for development, it is, for various socio-economic reasons, among the poorest countries in the world. About half of the country's population lives below the poverty line with 80% in the rural areas. The burden of poverty falls disproportionately on women, who constitute half of the total population. Logically, therefore, poverty alleviation and creation of rural employment are top priorities in the development agenda of the government of Bangladesh (GOB) which has adopted a broad based approach to poverty alleviation, emphasizing macroeconomic stability, economic liberalization, and support for a number of government agencies and non-government organizations (NGOs). Substantial progress has been made in implementing the microcredit program (MCP), and the scope for its efficient expansion is enormous.

Considering the significance of microfinance program in poverty alleviation in Bangladesh, I have selected this topic for preparing my internship report.

1.2 Objective of the Report:
The objectives of this report can be divided into mainly two segments such as:
Overall Objective: The overall objective of the report is to comprehensively analyze the success of...

Similar Documents

Free Essay

Nutritional Status & Agricultural Growth

...Nutritional Status & Agricultural Growth in Economic Development of Bangladesh Introduction Bangladesh faces an unfinished agenda with regard to nutrition. Child under nutrition rates remain among the highest in the world. Infant stunting and underweight rates in Bangladesh are above those in Sub-Saharan Africa (50% vs. 30% for underweight and 50% vs. 40% for stunting) despite the latter’s higher poverty rates. A key underlying factor, maternal malnutrition remains intractable despite efforts to improve the nutritional status of pregnant women. Iron deficiency anemia affects nearly 50% of all pregnant and lactating women. A direct consequence of this is low birth weight, which affects 30-50% of all newborns. It limits children’s growth potential and increases their vulnerability to infectious diseases and non-communicable diseases later in life. It also damages their ability to learn and develop useful skills, which exposes them to poverty and further under nutrition. Bangladesh is thus characterized by a cycle of intergenerational poverty, ill-health and malnutrition. To-date, public sector investments to address this have had very little impact because they were limited in scale and scope. Malnutrition is a multi-dimensional problem requiring interventions that cut across sectorial boundaries. Sustained improvements in nutrition outcomes are achieved not only through improved food security, but also changes in behaviours and knowledge regarding dietary diversity,......

Words: 2885 - Pages: 12

Premium Essay

Business

...of Real Estate and Construction Management Real Estate Management Thesis no. 91 Master of Science, 30 credits How to apply microfinance activities in the developed world - a case study in New York City Author: Sofia Bredberg Sara Ek Stockholm 2011 Supervisor: Han-Suck Song Master of Science thesis Title How to apply microfinance activities in the developed world – a case study in New York City Sofia Bredbeg & Sara Ek Real Estate and Construction Management Han-Suck Song Microfinance, poverty alleviation, financial sustainability, developed world, microfinance programs, empowerment, Grameen America, Acción USA, Project Enterprise Authors Department Master Thesis number Supervisor Keywords Abstract This study strives to examine how microfinance activities can be successfully applied in the developed world. This is done through a field study in New York City. Throughout interviews and observations with three of the largest actors in New York: Acción USA, Grameen America and Project Enterprise, as well as interviews with their clients, the lending processes and key characteristics of the organizations have been mapped. Furthermore, the Federal Reserve Bank of New York has been interviewed on the general opinion of microfinance in the US. Previous theory elaborates on some of the major challenges with implementing microfinance activities in the developed world, such as lack of funding and cultural differences hindering the lending processes to be......

Words: 17779 - Pages: 72

Premium Essay

Microfinance

...Urban Microfinance 9 5. Financial Inclusion in India 11 6. Microfinance as an Anti-Poverty Vaccine 15 7. Transformation of Microfinance in India 19 8. Scaling up Microfinance 22 9. Microfinance in India - A Tool For Poverty Reduction 26 10. SWOT Analysis of Microfinance 29 11. Delivery Models of Microfinance 32 12. Interest Rates in MFIs and prevailing trends 36 13. Scope of further study 42 14. Conclusion 44 15. Bibliography 46 OBJECTIVE OF THIS PROJECT WORK This project work tries to outline the prevailing condition of the Microfinance in India in the light of its emergence till now. Microfinance refers to small savings, credit and insurance services extended to socially and economically disadvantaged segments of society. It is emerging as a powerful tool for poverty alleviation in India. The prospect of Micro-Finance is dominated by SHGs (Self Help Groups) - Banks linkage Program. Its main aim is to provide a cost effective mechanism for providing financial services to the poor. To understand the transformation experiences better, the issues that trigger transformation were identified viz.: size, diversity of services, financial sustainability and focus. It is argued that the transformation experiences in India are not large in number. However, I found that there are three forms of organizations that seem to be popular in the microfinance......

Words: 9136 - Pages: 37

Premium Essay

College Project Report on Microfinance

...the fax number] [Pick the date] Shri Ram College of Commerce B.Com(h) Part-III Roll no.13/10 #9650430713 [Type the fax number] [Pick the date] DECLARATION I S.Ginmuansang Ngaihte hereby declare that the Project entitled Micro-finance in India submitted to University of Delhi in fulfillment for the degree of Bachelor in Commerce (honors). Whatever is written in this project is a bonafide work of mine and to the best of my knowledge. Place: Signature Date: ACKNOWLEGDMENT The satisfaction and euphoria that accompanied the successful completion of any task would be incomplete without the mention of the people who made it possible, whose constant guidance and support led to ultimate success. I would like to take this opportunity to express my profound gratitude and respect to my mentor Dr. Shuchi Pahuja, Associate Prof at PGDAV, University of Delhi for providing me with essential advices which were of immense value in my endeavor to complete my work. I would also like to thank my family and friends for their constant support and encouragement throughout this project. TABLE OF CONTENTS page *DECLARATION...

Words: 11931 - Pages: 48

Premium Essay

Term Paper

...A Proposal to Introduce Value Based Management in NGOs of Bangladesh Munima Siddika1 Abstract: Presently the rapid growth and diversification of the gigantic NGO sector of Bangladesh has given rise to questions and concerns, about their trade-offs between sustainability and pro-poor orientation; the impact and quality of services; corporate governance; management and accountability. The paper is based on a proposal to introduce a modern management system viz. value based management (VBM) in the NGOs of Bangladesh. Value-based management can be defined as an integrated management control system that measures, encourages and supports the creation of net worth. The report of Transparency International Bangladesh ‘Problems of Governance in the NGO Sector: The Way Out’ (TIB) 2007 is used here as an information source of finding out the flaws of existing management techniques. Finally the paper recommended implementation techniques of VBM in order to regain the image of the NGOs as a pioneer of social welfare in Bangladesh. Keywords: NGO, Transparency, Governance, Management, Strategies, Value Addition, Value Based Management etc. 1. Introduction Bangladesh has largely failed to assist the poor or reduce poverty because of limited resources and faulty planning, while Non Government Organizations (NGOs) have grown dramatically and ostensibly to fill up this gap. There are more and bigger NGOs here than in any other country of equivalent size. Bangladesh’s NGO sector is remarkable......

Words: 7065 - Pages: 29

Premium Essay

Empowering Women

...consensus on closer nexus between women empowerment and microcredit, women are disempowered for variety of reasons such as lacks of financial resources, being a member of patriarchy society, misinterpreted religious concepts about her role and position in the society, and cultural restraints. However, microcredit, globally promoted as a “miracle cure” for the financially weak, especially women who face so many problems accessing microcredit for variety of reason, which have been discussed in detail in this study. Methodology/Sample - This is qualitative study with inductive approach, and interpretive philosophy which allow the existence of multiple subjective perspectives and construction of knowledge. Women who availed microcredit from microfinance institutions (MFIs) were selected for the research study. The data was congregated through in-depth interviews and stopped at saturation level. Through phenomenological analysis, women lived experiences were analyzed. Findings - The results indicate that microcredit strengthens women in all dimensions but plays more influential role when they are provided with autonomous access to microcredit, support from family, and facilities from MFIs. Needless to say that the multidimensional women‟s stability contributes in alleviating feminization of poverty and this is not a...

Words: 4679 - Pages: 19

Premium Essay

Assessing the Effectiveness of Microfinance Loans from Nbc in Reduction of Poverty in Kinondoni District

...Assessing the Effectiveness of Microfinance Loans from NBC in Reduction of Poverty in Kinondoni District – Dar es Salaam. LIST OF ABBREVIATIONS. ACB - Akiba Commercial Bank CGAP - Consultative Group to Assist the poor CRDB - Cooperative and Development Bank FFI - Formal Financial Institution FINCA - Foundation for International Community Assiatance GDP - Gross Domestic Product NBC - National Bank of Commerce NGO - Non Governmental Organisation NMB - National Microfinance Bank NMFP - National Microfinance policy PFSs - Private Financial Sectors PRIDE - Promotion of Rural Initiatives and Development Enterprise SACCOS - Saving and Credit Cooperative Society SPSS - Statistical Package for Social Science URT - United Republic of Tanzania ABSTRACT The Ojective of the research was to assess the eeffectiveness/contribution of PFSs in reduction of poverty in Kinondoni District Dar es Salaam Tanzania. The research was conducted at NBC branches. The Branches to which the Reseacrh was conducted were Kinondoni Branch, Ubungo Branch, Mlimani City Branch, UDSM Branch and Tegeta Branche. Data were collected through interview and research questionnaires and were analyzed by using quantitative approach. The research study revealed that......

Words: 15107 - Pages: 61

Free Essay

Microfinance Institutions and Economic Growth of Small & Micro-Enterprises (Smes)

...MICROFINANCE INSTITUTIONS AND ECONOMIC GROWTH OF SMALL & MICRO-ENTERPRISES (SMES) ACASE STUDY OF (UWMFO) MICRO FINANCE INSTITUTION BY HENRY EGYEYU DEDICATION To the memory of my grand father Daniel Egeyu Whose love & enthusiasm for academia first kindled mine? ABSTRACT This research study investigates the impact of microfinance institutions on entrepreneurial development of Small & Micro-enterprises (SMEs) that are craving for growth and development in a war revived district called Gulu. The researcher used questionnaire as an instrument of primary data collection. Tables and simple percentages were used in data presentation. For clear analysis, the study centers on two broad variables; the dependent variable which is entrepreneurial development and the independent variable which is microfinance institutions. Three different hypotheses were formulated and tested using various statistical tools such as chi-square test, analysis of variance and simple regression analysis. The study reveals that (i) there is a significant difference in the number of entrepreneurs who used microfinance institutions and those who do not use them; (ii) there is a significant effect of microfinance institutions activities in predicting entrepreneurial productivity; and (iii) that there is no significant effect of microfinance institutions activities in predicting entrepreneurial development. The researcher concludes...

Words: 12676 - Pages: 51

Premium Essay

Scaling Up Access to Finance for India's Rural Poor

...Lack of credit information. 20 The tyranny of collateral 20 Weak legal framework and enforcement issues. 21 Government policy 21 Why Do Small, Rural Borrowers Find Rural Banks Unattractive? 26 Absence of flexible products and services 26 Transactions costs 26 Collateral 27 IV. RECENT EFFORTS IN INDIA TO IMPROVE RURAL ACCESS TO FINANCE: THE ROLE OF FORMAL—INFORMAL LINKAGES AND NEW PRODUCTS 28 SHG-bank Linkage Approach: Linking Commercial Banks to Grassroots Borrowers 28 How Effective Has SHG Bank Linkage Been in Targeting the Poor? 30 Impact on vulnerability of poor households 32 Some Lessons from SHG Bank Linkage 33 Key concerns: Limited outreach and scale of lending and issues in financial sustainability 34 Microfinance Institutions (MFIs) 35 What has constrained the outreach and scale of MFIs? 36 The “Service Provider” Model of Microfinance Piloted by Private Banks 37 The Kisan Credit Card 39 Recent Innovations in Micro- and...

Words: 29724 - Pages: 119

Premium Essay

Effects of Inflation on Performance Microfinance Institutions

...CHAPTER ONE 1.0 INTRODUCTION 1.1 Background of Study MFIs’ are recognized and acknowledged as vital and significant contributors to economic development, employment creation and technological development (mortis 2000). MFI have therefore been given great emphasis in recent times because they are considered as essential actors in achieving social and economic development in both developed and developing countries. Kenya with an estimated population of 29.6 million people and a per capita income of US $260 is categorized by the World Bank to be among the poorest countries in the world (world development report 1992). Kenya’s development challenge therefore remains in finding sustainable poverty eradication strategies. Micro and small enterprises have been seen as one of the strategies that can bring faster development. MFI does therefore play a big role in financing the micro and small enterprises for faster development. MFI’s enterprises are also highly rated for employment creation. They are therefore important in Kenya where unemployment and underemployment are estimated at between 25% and 35% respectively. MFI s’ through the provision of credit influence the type of technology adopted by entrepreneurs and even the rate of technology adoption. Small scale enterprises in the agricultural sector play a big role in providing food, income generation and employment creation. The application of technology is vital in enhancing growth and development of these......

Words: 13682 - Pages: 55

Premium Essay

Microfinance

...Current Issue: 18 April, 2012; Submit Article; Join Our Editorial Team Covered by ISI Social Science Citation Index _________________________________________________________________________________ __________________________ Table of Contents: 18 April, 2012; 6(15) Review Farshid Movaghar Moghaddam, Abu Bakar Bin Abdul Hamid and Elham Aliakbar Management influence on the export performance of firms: A review of the empirical literature 1989 – 2009 [Abstract] [Full Text] [Full Article - PDF] pp. 5150-5158 DOI: 10.5897/AJBM11.1408 Jesmin Islam and Hui Hu A review of literature on contingency theory in managerial accounting [Abstract] [Full Text] [Full Article - PDF] pp. 5159-5164 DOI: 10.5897/AJBM11.2764 Research Articles Norazah Mohd Suki Third generation (3G) mobile service acceptance: Evidence from Malaysia [Abstract] [Full Text] [Full Article - PDF] pp. 5165-5171 DOI: 10.5897/AJBM11.281 Chia-Hsing Huang, Liang-Chun Ho and Shu-Shian Lin Bio-fuels? – Across financial tsunami of 2008 [Abstract] [Full Text] [Full Article - PDF] pp. 5172-5184 DOI: 10.5897/AJBM11.918 Mahmood A. Bodla, Rizwan Qaiser Danish and Muhammad Mussarrat Nawaz Mediating role of perceived organizational politics in relating job characteristics to morale [Abstract] [Full Text] [Full Article - PDF] pp. 5185-5192 DOI: 10.5897/AJBM11.1246 Hsi-Chi Hsiao, Su-Chang Chen, Chun-Mei Chou, Jen-Chia Chang and Ling-Ling Jing Is entrepreneurial education available for graduates? [Abstract] [Full Text] [Full Article......

Words: 1110 - Pages: 5

Free Essay

Microfinance

...Master Thesis Entrepreneurship and Microfinance: A Framework for Impact Evaluation Abstract The idea and implementation of Microfinance has become a hot topic and is currently at the central stage in debates on poverty alleviation. Microfinance can be defined as the sustainable delivery of financial services to the poor that aims at creating a world in which as many poor households as possible, have access to a suitable range of financial services (Christen, Rosenberg and Jayadeva, 2004). However, the large majority of impact studies of microfinance lack empirical support and several limitations and obstacles continue to haunt the potential outcomes of microfinance, such as selection bias (Tedeschi, 2007) and lack of integration with the commercial banking sector (Copestake, 2007). In my thesis, I will focus on yet another limitation, that of lack of entrepreneurial knowledge amongst lenders in microcredit. I will develop on the marginal impact of entrepreneurial training on microcredit and suggest an empirical framework. The paper will start by presenting the topics of entrepreneurship and microfinance and the current situation in Tanzania. In Part II a review of an important study by Karlan and Valdivia will be discussed and in the following section a suggestion for a framework for an empirical study will be made. Conclusions and limitations will be presented in the final sections. Student: Eva Teekens ID: 5704871 Study: Master Business Studies Specialization:......

Words: 23632 - Pages: 95

Free Essay

Analysis of Micro Finance Institutions in India

...AMRITA BUSINESS SCHOOL, BENGALURU | MICROFINANCE INSTITUTIONS | MARKET RESEARCH PROJECT | | | Contents LIST OF TABLES 2 INTRODUCTION 2 WHY MICROFINANCE? 3 MICRO FINANCE SERVICE PROVIDERS 4 THE EMERGENCE OF PRIVATE MICROFINANCE INDUSTRY 4 MICRO FINANCE IS ALL AROUND US 5 LITRETURE REVIEW 6 SUMMARY OF Y. H. MALEGAM COMMITTEE REPORT 2011 14 Why Malegam Committee Report was Set up? 15 Key recommendation 16 PROFIT AND NON PROFIT ORGANIZATION 21 Differences between for-profit MFI’s and non-profit MFI’s 23 For Profit MFI 23 Non Profit MFI 24 METHODOLOGY 25 CAPITAL STRUCTURE AND ASSET ALLOCATION 25 DEPTH AND BREADTH OF OUTREACH 27 EFFICIENCY 28 PRODUCTIVITY 29 QUALITY OF THE PORTFOLIO 31 ANALYSIS OF NUMBER OF ACTIVE BORROWERS 33 PROFITABILITY AND SUSTAINABILITY 35 CONCLUSION 36 REFERENCES 36 LIST OF TABLES Table 1 Table of Comparision 12 Table 2 Comparison of Debt Equity Ratio 25 Table 3 Debt Equity Ratio 26 Table 4 Comparison of Depth and Breadth of MFIs for the year 2012 with 2010 27 Table 5 Comparison of Depth and Breadth of MFIs for the year 2011 with 2010 27 Table 6 Operating Expense / Loan Portfolio 28 Table 7 Industry Standard for Operating Expense / Loan Portfolio 29 Table 8 Productivity of MFI’s for the year 2010 29 Table 9 Productivity of MFI’s for the year 2011 30 Table 10 Industry standards for year 2010 30 Table 11 Quality of portfolio for the year 2010 31 Table...

Words: 9019 - Pages: 37

Premium Essay

Prof

...CHAPTER TWO LITERATURE REVIEW 2.0 Introduction This chapter reviews literature related to this study. This was done with the expectation that relevant information would be obtained to help shape and enrich the study, knowledge of what has been done on this topic is important in helping to clarify issues. The following topics were reviewed for the study; definition of loan, definition of SME, general principles of lending, loan monitoring and control, access to credit as well as repayment performance: theory and practice. 2.1 Definition of loan A loan is a type of debt like all debt instruments, a loan entrails the redistribution of financial assets over time, between the lender and the borrower. The borrower initially receives an amount of money from the lender which they pay back, using but not always in regular installment. Types of loans There are many different types of loans you can take out. When you are looking to borrow money, it’s important that you know your options. i. Open-ended loans: they are loans that you can borrow over and over again. Credit cards and lines of credit are the most common types of open-ended loans. With both of these loans, you have a credit limit that you can purchase against. Each time you make a purchase, your available credit decreases. As you make payments, your available increases allowing you to use the same credit over and over. ii. Closed-ended loans: this cannot be borrowed once they have been repaid. As you make payments......

Words: 11858 - Pages: 48

Free Essay

Microfinance Et Pauvreté : Quantification de La Relation Sur La Population de Tlemcen

...République Algérienne Démocratique et Populaire Ministère de l’Enseignement Supérieur et de la Recherche Scientifique Université Abou Bekr Belkaїd de Tlemcen Faculté des Sciences Economiques et de Gestion THESE DE DOCTORAT EN SCIENCES ECONOMIQUES Thème Microfinance et Pauvreté : Quantification de la Relation sur la population de Tlemcen Présentée et soutenue publiquement par : Mr. SMAHI Ahmed Sous la direction du : Pr. BENHABIB Abderrezak (U. Tlemcen) JURY Professeur Bendi Abdeslem Professeur Benhabib Abderrezak Professeur Derbal Abdelkader Professeur Ait Ziane Kamel Docteur Maliki Samir B.E Docteur Baba Abdelkader Université de Tlemcen Université de Tlemcen Université d’Oran C.U.Khémis Méliana Université de Tlemcen Université de Mostaganem Président Encadreur Examinateur Examinateur Examinateur Examinateur Année Universitaire : 2009/2010 Remerciements Au terme de ces années de recherche, mes premiers remerciements s’adressent au professeur Abderrezak Benhabib, mon directeur de thèse qui m’a apporté un précieux soutien dans ce travail, en s’avérant toujours disponible et exigeant pour l’achèvement de ce travail. A vrai dire, le choix de ce thème lui revient en toute sincérité vu l’intérêt qu’il portait à l’enrichissement de la thématique celle de la pauvreté. Je remercie Mr Benhabib aussi pour son soutien et ses conseils, la confiance qu’il m’a accordée et la grande liberté qu’il m’a laissée dans la réalisation de ce travail. Certes, nous avons appris......

Words: 93765 - Pages: 376