The field of microfinance emerged in the developing world as a vehicle to provide financial services to poor segments of population is gradually being seen as a profitable business opportunity. In the initial stages of development, these activities were perceived to be done with a service agenda. As the micro finance institutions (MFIs) began to mature, they started facing performance dilemma, ...

Dynamic incentives, where incentives to repay are generated by granting access to future loans, is one of the methodologies used by microfinance institutions (MFIs). In this paper, I present a model of dynamic incentives where lenders are uncertain over how much borrowers value future loans. Loan terms are determined endogenously, and loans become more favorable as the probability of default be...

There are different ways of studying the development of microfinance organizations. Most of the time, people will adopt one of them based on what is their true objective. In some cases, this will mean focussing on the social impact ; in others, it will mean focussing on the financial and/or operational management ; in others still, it will mainly be related to the study of the complementarity a...

Microfinance is a type of banking service that is provided to unemployed or low-income individuals or groups who would otherwise have no other means of gaining financial services. Micro finance through Self Help Group (SHG) has been recognized internationally as the modern tool to combat poverty and for rural development. Micro finance and SHGs are effective in reducing poverty, empowering wome...

2 Since 2006 China's central government has opened up its financial markets to foreign Microfinance Institutions (MFI). The idea is that by allowing MFI's to operate, Agricultural Banks would lead to increase access to credit, economic efficiencies and growth in rural agriculture, and efficiency within the financial system in underserved markets. Microfinance as it is understood today refers to...

This paper uses a unique data set on 143,000 poor households from Northern Bangladesh to analyze the effects of microfinance membership on a household’s ability to cope with seasonal famine known as Monga. We develop an estimation strategy that exploits a jump and a kink at the 10 decimal land ownership threshold driven by MFI screening process to ensure repayment by excluding the ultra-poor. E...

This paper describes a pilot study testing the feasibility of an innovative savings-led microfinance intervention in increasing the economic empowerment and reducing the sexual risk behavior of women engaging in sex work in Mongolia. Women's economic vulnerability may increase their risk for HIV by compromising their ability to negotiate safer sex with partners and heightening the likelihood th...

Consequences of HIV and AIDS are exponential in Kenya, touching not only the health of those infected, but also depleting socioeconomic resources of entire families. Access to financial services is one of the important ways to protect and build economic resources. Unfortunately, the norm of financial viability discourages microfinance institutions from targeting people severely impacted by HIV ...

Credit scoring is perceived as an important innovation for microfinance institutions in managing the credit risk of their clients. Increase in defaults has necessitated microfinance institutions to improve their credit analysis by incorporating objective procedures. Various studies have confirmed that credit scoring can increase efficiency and reduce costs for microfinance. However, the take up...

Distributing loan using group lending method is one of the unique features in microfinance, as it utilises peer monitoring and dynamic incentive to lower credit risks in extending collateral-free loan to the poor. However, many microfinance institutions (MFIs) eventually perceive it to be costly and restricting loan growth thereby resorted to individual lending method to enhance profitability. ...