| In every society, access to financial
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| | are there many viable microfinance
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| services for every citizen is a vital
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| | institutions.The Purpose of Social
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| part of sustained economic development.
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| | Funds:Social funds are demand-driven
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| More emphasis should be given to the
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| | mechanisms that channel resources to the
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| roots of society: the rural sectors and
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| | poor and support subprojects that respond
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| working-class. But most of the time, it
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| | directly to the priority needs of the
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| is very hard to identify financial
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| | low-income population. They have been
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| institutions that provide these needed
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| | used in a growing number of countries to
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| services, which could improve the
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| | alleviate the social and economic effects
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| livelihoods and reduce risk. Most
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| | of economic crises, cushion the impact of
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| commercial financial institutions do not
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| | adjustment programs, generate short-term
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| provide the proper services needed to
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| | employment, and finance small-scale
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| support these sectors, as it is not
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| | investments in poor communities. Access
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| viable to provide cheap services to these
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| | to micro-credit is not sufficient, the
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| communities. They are also unable to
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| | poor also need access to savings,
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| provide their services directly to the
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| | insurance and payment services. Several
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| target group because of high transaction
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| | wide-scale studies have been conducted on
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| costs coupled with small transaction size
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| | identifying lessons, best practices, and
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| and the higher perceived risk of
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| | potential pitfalls; they include Panama,
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| financing clients without
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| | Yemen, and Eritrea.Example Bosnia and
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| collateral.Therefore, may countries today
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| | Herzegovin:The overall aim was to
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| use alternative approaches instead. The
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| | jumpstart the process of establishing a
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| goal is to bring all people into the
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| | strong microfinance sector so as to help
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| country's financial system so that they
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| | raise incomes, create jobs, and develop
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| will have continuous and permanent access
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| | the smallest businesses. To provide
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| to affordable financial services.There
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| | access to credit to the economically
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| are several categories of financial
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| | disadvantaged, specifically low-income
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| providers1) Formal Financial Institution:
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| | micro-entrepreneurs who had no access to
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| Professional entities such as licensed
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| | credit from the commercial banking
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| banks.
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| | sector.Problems in the past:Government
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| Problems: The small profits that can be
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| | policy is oriented more towards creating
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| earned may not compensate for the
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| | employment and improving income in
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| significant cost and effort involved in
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| | response to a crisis than toward
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| tailoring products and delivery systems,
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| | long-term objectives. As such, social
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| especially low-income people.
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| | fund activities were not geared towards
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| Nevertheless, banks interested in this
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| | strengthening or reforming the
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| niche have successfully created a
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| | microfinance sector, but rather towards
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| separate unit within the bank, or
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| | using existing microfinance programs as
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| established a separate affiliated company
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| | channels for expanding employment.
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| before.2) Informal Providers: Small
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| | Further problems range from governments
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| member-managed entities that are not
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| | and donors using these organizations to
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| licensed.3) Semi-Formal Institutions:
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| | channel cheap credit to rural populations
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| NGO, small financial cooperatives, and
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| | to mismanagement of funds.The Purpose of
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| community-based financial organizationsa)
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| | Credit Unions:A credit union is a
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| Cooperative Financial Institutions
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| | community based financial institution
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| (Cooperative banks, credit unions to
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| | with representation from all
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| small village based cooperative
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| | socioeconomic levels. Main purposes are
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| entities)b) Microfinance Non-Governmental
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| | the economic, social, and political
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| Organizationsc) Community Based Financial
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| | promotion of democracy and securing of
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| Organizations (village savings, loan
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| | financial stability, and to provide
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| associations, savings and credit
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| | competitive and quality financial
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| associations, self-help groups)d)
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| | services responsive to the needs of its
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| Traditional village-based providers
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| | members to improve their livelihood. All
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| (money lenders, small shops and input
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| | credit unions operate within a common
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| suppliers who provide goods on credit,
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| | bond, such as employment- all members
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| and informal savings and credit
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| | must work for the same group of employers
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| groups)The formal financial institutions
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| | or industry or in the same occupation.
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| approach focuses on building strong,
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| | Credit unions are for service rather than
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| stable financial systems that serve the
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| | for profits.What is the right
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| entire population. This is the preferred
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| | approach?Consulting with communities to
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| approach when there are Labor banks,
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| | identify the demand for and supply of
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| microfinance institutions, and financial
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| | financial services among the
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| cooperative/ credit union networks that
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| | working-class and rural areas to be
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| are interested in broadening their
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| | covered. What financial services are
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| outreach to the low-income society. The
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| | provided, by whom, and how? What are the
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| community-based institutions approach
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| | gaps in coverage, in terms of types of
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| focuses on building strong informal or
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| | customers served, types of services
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| semi-formal community financial
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| | provided, and geographical reach?
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| institutions, and then linking them with
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| | Consider ownership structure, governance
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| the formal financial sector.The Purpose
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| | and management structure, financial
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| of Microfinance:Microfinance is the
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| | products, customer base, ability to cover
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| provision of financial services,
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| | costs and existing relationships with
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| including savings, credit, insurance and
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| | professional financial services
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| payment services, to low income people.
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| | intermediariesPeter Kopitz is currently
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| Typically, low-income people, especially
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| | living in Bangkok, Thailand after
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| those living in rural areas, have been
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| | graduating with Honors from the
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| unable to obtain quality services at a
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| | University Of Chicago Graduate School Of
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| reasonable price from the formal
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| | Business with a Masters Degree in
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| financial sector. Microfinance is best
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| | Business Administration. He is actively
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| supported through financial sector
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| | involved in researching economic and
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| programs, however, in many countries
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| | political development in Thailand,
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| where social funds operate there are no
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| | focusing primarily on property
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| financial sector programs with a strong
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| | development, security analysis and
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| emphasis on access to finance issues, nor
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| | investment banking.
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