It allows the poor to participate in services such as, credit, venture capital, savings, and insurance. The provision of financial services to the poor helps to increase household income and economic security, build assets and reduce vulnerability, creates demand for other goods and services for example education and health care; and stimulates local economies. 1.1 Definition. In the previous study of David Sloan (2013), Microfinance is providing small loans, primarily to women in poverty, and to who without collateral are unable to receive services from the formal financial sector. Generally, without access to capital, people cannot invest in activities such as existing businesses or new microenterprises, and it significantly reduces the chances of many to emerge from poverty.
This has been successful structure by providing the necessary measures to create a supportive environment where borrowing and repayment was not unachievable. Grameen Bank made it possible for the poor to get involved in banking (borrowing), which was unheard of before. Grameen Bank was as a whole run by these not wealthy communities and for the most part women. Research has proven that higher incomes was prevelant for Grameen mem... ... middle of paper ... ...” (Abedin, 1996). The microcredit system provided the foundation for the poor to help themselves.
In addition to banks and insurance companies, micro-financing institutions have continued to play an important role in giving credit and saving facilities to micro sectors of the economy. Microfinance is often considered one of the most effective and flexible strategies in the fight against global poverty. It is sustainable and can be implemented on the massive scale necessary to respond to the urgent needs of those living on less than $1 a day, the World’s poorest.
There is great optimism as the growth of microfinance has shown that the poor are creditworthy, while the formal banking institutions serve only investment-worthy clients who are non-poor. However, to eliminate poverty, microfinance must be carried out in a sustainable way and cheaply, reaching a massive scale of the poor, with continuous improvement in the quality of service delivery. My study will therefore focus on the impact of microfinance in alleviating poverty in the rural Gambia. 2. THE RESEARCH PROBLEMS There has been a lot of emphasis on the importance of access to financial services by the poor and marginalized as a means of reducing poverty in many forms.
Social policy is widely seen to include policy and programmes which aims at dealing with income security and income redistribution as well as well being, education and social services that support individual’s quality of life in the communities. Economic activities by the government and authority bodies such as social groups, charities and local associations bring about the material means to promote and encourage healthy economy. Social welfare is not only determined by the government services as it includes the way families take responsibility for their own welfare such as solving their own problems through their efforts and hard work to earn income that would sustain them. Also the contributions made by the Religious bodies for example tite payment in church and specialised institution they provide for the elderly, mentally ill and orphans is one of the means welfare of people is met (Titmuss 1947, p.30-31). Social policy can include a number of purposes; it can help to distribute resources among members of a country to ensure that good standards of living are maintained, It can shape individuals social and economic behaviours, it can alter
Access to credit (CREDIT): credit service especially from formal institutions has many advantages in the life of borrowers. They are given training how they create jobs or entrepreneurship; they are encouraged to save some amount of earning on regular basis which used in some occasion by withdrawing it. Many from credit service institution can buy inputs for agricultural activities and other activities to be fruitful in production ( Jemaneh, et.al 2014). The variable is dummy,1 for having an access to credit service and 0 for otherwise. The existence of credit contributes much to reduce poverty.
These factors sometimes lead to borrowing illegally, and neglecting the regulation of lending. Micro-loaning is designed to break the cycle of poverty by allowing low income residents access to outside funds, which they were previously restricted from. These funds give the opportunity to participate in investments, such as small businesses, and create a steady flow of income. Micro-loaning provides financial services for those who might have low or no income, as well as not having the official documents required when applying for a regular loan. With the goal of low interest and easy application, micro-loaning appears to the most efficient, alternative way of alleviating poverty.
As Microfinance has the ability to provide the short loans and other microfinance services such as saving, insurance and training etc. to the low income earners which ensure the economic development of any country, this study could push the government to support the Microfinance institutions more properly. in order to make investments in providing financial support to the MFIs, this study would help the government to see the feasibility of their
Micro-finance usually implicates small loans, small savings, small amounts of money, small businesses, and therefore its service differs from any other way of banking. Does micro-financing really work is the most common question people ask before exposing themselves to the main act. Regardless its limitations and failures, micro-financing has proved as being efficient and successful not only in reducing the poverty, but also in achieving various social objectives such as empowering women and thus promoting gender-equality, and developin... ... middle of paper ... ... greatly affected and have taken these small loans and turned their small businesses into flourishing businesses that can support their families. Micro-financing is in fact successful if loans are given to the right people who will use them in a correct manner. Perhaps micro-financing is most successful in smaller countries with a high rate of poverty because the people are less likely to take advantage of the money being given to them and know they must use it wisely to survive.
so that uneducated people can also operate it. In this why it will be user friendly for people who are illiterate; Bank needs to reshape its business policies to integrate specific plans to promote financial inclusion for poor people. For bank it’s both as business opportunity as well as a corporate social responsibility. Bank has to make use of all resources available including technology and expertise available to help in financial services. It may seem that taking banking to the sections constituting the bottom of the pyramid may not be that much profitable but it should always be reminisced that even the relatively low precincts on high volumes can be a very profitable