Guiding principles of microcredit
- Autores: Nazrul Islam
- Directores de la Tesis: Ana María Fuertes Eugenio (dir. tes.), Nurjahan Begum (codir. tes.)
- Lectura: En la Universitat Jaume I ( España ) en 2013
- Idioma: inglés
- Tribunal Calificador de la Tesis: Juan Velarde Fuertes (presid.), Miguel Ginés Vilar (secret.), Josep María Jordán Galduf (voc.)
- Materias:
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- Resumen
SUMMARY of the THESIS Title of the Thesis: ¿Guiding Principles of Microcredit¿ Introduction: During last few decades it has demonstrated that microcredit is a very important tool for poverty alleviation, as well as for social and financial inclusions (Ehrbeck,T: 2012). There is no doubt that strong demand exists for microcredit programs, among the poor, all over the world, as more than half of the total population in this planet have no access to traditional financial system - because they are not able to provide collateral.
But it is daunting to know that many microcredit programs around the world have failed to reach the poor or bottom of the pyramid. When some of them (microcredit organizations) are trying to focus on the poor but have facing a lot of difficulties regarding credit discipline, client satisfaction, positive social and financial impacts, etc. And, because of that difficulties many credit organizations consider ¿microcredit is not effective in different society and culture¿, ¿poor are not credit worthy¿ (Oxford Today, Volume 21, No-2, 2009), ¿poor are very risky and hard to reach¿, etc. As of results still a large numbers of poor all over the world do not have access to Microcredit (Essentials: Microfinance, Volume No-3, December 1999). Conversely, at the same socio-economic context some microcredit organizations are very effective and focussing poorest of the poor , maintaining satisfactory credit discipline, very high client satisfaction and, having significant social and financial impacts, etc. From this consequence it is beyond doubt that there are some significant discrepancies on the approach of MFI¿s, which gives them different results.
The present study has investigated those issues that are responsible to give different results even in the same socio-economic culture. As well as tried to determine the key principles of success and failure. Then tried to explore the ¿Guiding Principles of Microcredit ¿ those are beyond any cultural, religion or socio-economic environment.
Methodology of the study: Considering the objectives, the study followed a combined qualitative and quantitative mixed method approach to determine and understand key findings. As a means of achieving authentic findings the study followed a field survey for primary data collection. Two sets of questions were used for field survey, one was for microfinance organizations and another was for their microfinance beneficiaries. Primary data was collected from 13 microfinance organizations in 6 countries (Bangladesh, Mongolia, Kenya, Nigeria, Guatemala and Spain) under four continents (Asia, Africa, Latin America, Europe). From each country at least two microfinance organizations were selected those are working in the same community of that country but at least one with good experience and one with bad experience. All together 663 beneficiaries and more than 60 employees from those 13 microfinance organizations were personally interviewed by the author of this paper in order to enrich and strengthen the findings of the study. Key findings of the study: ¿ ¿Effective group mechanism is more efficient than individual lending mechanism to reach poorest of the poor¿-(Hypothesis-1) ¿ ¿Mutual Trust¿- through building human relation is the most fundamental to make microcredit program successful-(Hypothesis-2) ¿ Apart from those proofed hypothesis and guiding principles- it has demonstrated that a blend of need based financial and social services are the key to make microfinance program successful. And it is necessary to develop a ratio strategy for social and financial return in the context of sustainability. ¿ Conclusions: According to Nobel Peace Laureate (2006) Prof. Muhammad Yunus ¿the concept of microcredit is based on mutual trust as there is no collateral¿. So, it is the responsibility of MFIs to develop and design their program and method of implementation in order to build human relation and mutual trust between their MFIs and their beneficiaries. MFIs those who do not follow regular meeting, home visit, social activities, etc. or any other suitable strategy according to their country context, for them it is difficult to develop mutual trust with their beneficiaries, and because of that they are having more difficulties in their program. And in order to avoid those difficulties most of the MFIs move away from poor and ask for collateral to provide credit.
Because of that microcredit program has to be designed according to the socio-economic environment, culture, legal framework, geographical structure, etc. in order to develop human relation and mutual trust. An strategy to develop mutual trust in Africa may not useful for Europe or Latin America but there is no doubt when MFIs will able to develop this mutual trust among their beneficiaries and organization it will work any place of this planet. The most typical criticism of microcredit or microfinance is, not reaching the poorest of the poor and collateral or joint liabilities of microcredit beneficiaries. Generally MFIs overlook that blame at the name of sustainability. But this study has demonstrated that an well-designed `effective group mechanism¿ can reach poorest of the poor and can replace `collateral or joint liabilities¿ by `mutual trust and human relation¿ as well can be socially and financially sustainable in a certain time period. Thus, the emergence of innovative ¿effective group mechanism¿ which is based on `mutual trust and human relation¿ in the field of financial intermediation has created new hopes for the poor, who are otherwise un-bankable from the perspectives of traditional financial system.
References: ¿ Copestake, J., (2007), ¿Mainstreaming Microfinance: Social Performance Management or Mission Drift?¿ World Development Vol. 35, No. 10, pp. 1721¿1738 ¿ CGAP (2006) `Access for All: Building Inclusive Financial Systems¿. Retrieved 2 June 2009, from the world wide web: http://www.cgap.org/gm/document-1.9.2715/Book_AccessforAll.pdf.
¿ Daley-Harris, S. (2009) `State of the Microcredit Summit Campaign Report 2009¿. Washington D.C.: Microcredit Summit Campaign. Retrieved 19 June 2009, from the world wide web: http://www.microcreditsummit.org/uploads/socrs/SOCR2009_English.pdf.
¿ Fuertes, A y Chowdhry, N (2011): ¿When does well-designed group methodology and when does well-designed individual methodology work best to strengthen social and financial inclusion and what are those designs?¿- 2011 Global Microcredit Summit Commissioned Workshop Paper, November 14-17, 2011-Valladolod, Spain ¿ World Bank (2007) `Finance for All? Policies and Pitfalls in Expanding Access¿. World Bank Policy Research Report, August. Washington D.C.: World bank.
¿ Yunus, M (2008): Creating a World Without Poverty, public affairs, New York, USA ¿ Yunus, M (December-1, 2008): Social Business for a New Global Economic Architecture, Grameen Bank, Dhaka-1216, Bangladesh
