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| 1 |
ID:
117805
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2012.
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| Summary/Abstract |
Microfinancing Institutions (MFIs) have grown in popularity as an effective tool for reducing poverty in the developing countries over the last three decades. MFIs are different from traditional financial institutions like banks in many ways. They mainly provide financial assistance (usually without any security) to the needy poor who are denied access to institutional credit from other sources. Data relating to 2007 has shown that there are more than 3,000 MFIs operating around the world. Hundreds of millions of dollars of donor funds are injected into the microfinancing sector. Therefore, the 'performance' of MFIs which affect the effective and efficient utilization of these funds is an important issue. Standard criteria used to measure the performance of commercial enterprises such as profitability, return on investment, share price, etc., are not appropriate to assess the performance of MFIs which have fundamentally different objectives that conflict with commercial interests. This article analyzes the issues relating to criteria used for identifying the performance of MFIs and recommends a new approach to measure the performance of MFIs in an objective manner.
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| 2 |
ID:
100319
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2010.
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| Summary/Abstract |
Co-finance has steadily grown to provide credit to hundreds of thousands of individuals living in third world countries. The spreading of and innovation within the microfinance sector demonstrates a successful neoliberal initiative that is both socially conscious and economically beneficial. By connecting groups of poor individuals to lending institutions or affluent individuals in developed countries, microloans have been able to foster the strengthening of local economies, necessary for consuming life-improving technology, while incurring minimal risk to the lending party. Criticisms of microfinance-both non-profit and for-profit models-appear misguided as there are clear data demonstrating both a low incidence of default and modest interest rates. Moreover, credit has been the foundation for modern economic growth. Ethical lending to the Third World should therefore not be denied, but rather intensified through the faculty of microfinance.
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