Towards a more market-oriented approach to credit and savings for the poor

Jackelen, Henry R.; Rhyne, Elisabeth

doi:10.3362/0957-1329.1991.037

Cited by 16 publications

(14 citation statements)

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“…It was not to develop a banking service tailored to the needs of the poor. 24 This has led some writers to argue that MCIs should learn to lend before they take deposits (Jackelen and Rhyne, 1994). 25 Director, M. Yahiya, telephone Dhaka 32 66 15.…”

Section: Financial Services For Their Own Sakementioning

confidence: 99%

The savings of the poor: improving financial services in Bangladesh

Rutherford¹

1998

J. Int. Dev.

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The capacity of the poor of Bangladesh to save is surprizingly large Ð surprizing to observers, and surprizing to the poor themselves. This capacity has long been used, with modest success, as the basis for self-help savings-and-loan devices that the poor (like others) have used in the absence of formal banking services. But over the last twenty years an innovative form of ®nancial service provision has been developed in Bangladesh by`micro-credit institutions' (MCIs) such as the Grameen Bank, BRAC and ASA which has exploited this capacity to save, to the bene®t of millions of rural people, and at the same time brought pro®ts to the MCIs. Splendid though this development has been, it could be more splendid. For under the systems adopted by the MCIs Ð who are fundamentally lenders rather than ®nancial intermediaries Ð the poor can exploit their capacity to save only by going into debt. This paper argues that a shift in approach would allow the MCIs to oer a much better service to a broader range of customers (including the very poor), and bring surprizing bene®ts to themselves as well. #

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Section: Financial Services For Their Own Sakementioning

confidence: 99%

The savings of the poor: improving financial services in Bangladesh

Rutherford¹

1998

J. Int. Dev.

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“…Developing nations have experienced an increase in their informal economies, with poor women and children overrepresented in this sector because it offers flexibility in time and location so that workers can simultaneously earn money and manage household responsibilities (Nash, 1990;Poster & Salime, 2002). Pay is usually low in this economic sector, which lacks job security, provides no benefits, and offers little to no opportunity to unionize to gain representation (Jackelen & Rhyne, 1992;Morris & Meyer, 1993). Despite such disadvantageous aspects of women's informal wage work, the informal sector has served as a crucial focus in economic development initiatives that target mainly, and sometimes exclusively, women's self-employment and economic independence (Robinson, 2001).…”

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Targeting Women Versus Addressing Gender in Microcredit: Lessons From Honduras

Vonderlack-Navarro

2010

Affilia

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Microcredit, the practice of extending small loans to women who work in the informal economy, aims to help women achieve financial empowerment and independence. The research on microcredit, however, has tended to ignore how the context of women’s household relations can complicate this goal. This report of an ethnographic study of women’s participation in microcredit in Tegucigalpa, Honduras, indicates that male partners’ behaviors can both facilitate and limit women’s use of loans and repayment strategies. The article concludes with a discussion of how relational and family dynamics may be considered in the design of future economic development programs, such as savings initiatives.

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“…She states that at an advanced stage of institutional evolution, savings mobilization will provide the largest share of capital. In a similar vein, Jackelen and Rhyne (1991) argue that continuous support from the donor community leads MFIs to become highly dependent on subsidies and thereby discourages them from becoming a competitive and selfsufficient financial intermediary. With a more skeptical point of view, Schmidt and Zeitinger (1996) argue savings mobilization costs and risks may be material, and as such, alternative financing is preferred.…”

Section: Evolution Of Microfinance Financingmentioning

confidence: 99%

Raising Capital for Microfinance: Sources of Funding and Opportunities for Equity Financing

Fehr

Hishigsuren

2006

J. Dev. Entrepreneurship

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On a worldwide basis, microfinance institutions (MFIs) provide financial services to the poorest households. To date, funding of MFI activities has come primarily from outright donor grants, government subsidies, and often debt capital, including debt with non-market terms favorable to the MFI. These traditional sources of MFI financing may not be sufficient to allow MFIs to provide maximum services. There is a subset of the pool of mainstream equity investors who would consider investing in MFI opportunities, even knowing that they would not expect to earn the full economic rate of return that such investments would otherwise require. However, as part of their investment evaluation process, these investors would ask: What would the market determined required expected rate of return for my MFI investment be? What return on investment (ROI) do I expect to earn on my MFI investment? Is the difference in the above two returns acceptable given my level of social motivation? How will I "monetize" my investment and when? The purpose of this article is to employ modern corporate finance techniques to address these questions.

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Towards a more market-oriented approach to credit and savings for the poor

Cited by 16 publications

References 0 publications

The savings of the poor: improving financial services in Bangladesh

The savings of the poor: improving financial services in Bangladesh

Targeting Women Versus Addressing Gender in Microcredit: Lessons From Honduras

Raising Capital for Microfinance: Sources of Funding and Opportunities for Equity Financing

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