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.
They gained popularity because they managed to show that poor people can be reliable bank customers. Microfinance institutions are majorly non-profit making institutions with the aim of providing credit loans to the poor people in the society with the aim of crossing them over the poverty line and also improving their economic status. (Mason and Yamaguchi) Microfinance has been a powerful and effective tool in the reduction of poverty by bringing the poor into the income stream. This is because it creates an opportunity for the poor to be able to indulge in self-employment rather than waiting for employment opportunities to be created. The invention of Grameen Bank and other programs has led to the spread of more and more micro-credit and microfinance services to the poor in the society.
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.
He believed that making loans available to a wide population would have a positive impact on the villages that suffer from poverty in Bangladesh. The bank began as a research project by Muhammad. The bank had loans available for villages such as Jobra and others in 1976. The project was becoming a huge success and so the bank distributed to other villages in Bangladesh. Today the bank expands across the nation and still provides small loans to villages.
Poor people around the world started to lose faith to their countries’ authorities to provide for their well being and started to tur... ... middle of paper ... ...e of the challenges that the Grameen Bank has faced in the last years is that the government believed that citizens from Bangladesh are just growing a big dept that will only damage their lives in the future. However, as stated before, 98% of the loans have been repaid. Overall, microcredit has helped millions of people around the world and it continues to have a great impact on poor people, informing them that all they need is a little ‘push’ or start-up money to begin creating a better life and subsequently a better community. Each organization has its own goals and purposes depending on the country where they reside as well as different challenges that have appeared. Microcredit is helping poor people and small business owners to better themselves as well as to their families and have their time, skills, and ideas utilized in an effective and positive way.
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.
In the country where poor people income not sufficient to fulfill the basic needs including provision of foods or nutrition, slack of health and medication facility, lack of better education facility, lack of sanitation system and poor household conditions such country is called third world country (Adewole, 2008). Growth, stability, survival and increasing in income all these objectives can be achieved through the various financial services that are offered by the microfinance institutions. To prove this a data have been collected from Bangladesh, Sri Lanka, Indonesia and used counter factual approach to find out the impact of microfinance on poverty. He observed positive impact of microfinance on poverty through the study in all countries from where he collected data (Hulme & Mosley,
This was a "relief" act and also helped workers find jobs. d. Agricultural Adjustment Act was a government regulation that limited crop production to allow farmers wages to rise. This was an act of reform and served to help farmers. e. The Tennessee Valley Authority helped develop the Tennessee Valley through the development of the electric plant and other infrastructure. This was a recovery act and helped businesses by funding their projects, and the money eventually trickled down to the workers.
The financial market fails to provide access to poor. The high cost of small scale lending are constraint to poor to access to formal finance, this push them to informal financial sector or to the extreme financial exclusion. When the access to financial services is improved, this enables to build up productive assets (Kirk Patrick, 2006). Microfinance institutions may correct the market failure left by formal baking system and help small businesses to access fund and creates economic growth and lifting poor out of poverty.It is normally asserted that MFIs are not reaching the poorest in society. However, despite some commentators’ disbelief of the impact of microfinance on poverty, studies have shown that microfinance has been successful in many situations.
Jamaica has experienced high levels of migration since it was colonized by the British colony and Contractual Agreement is a major source of acquiring the necessary funds to help provide for the family on a whole and can be the starting point to reduce poverty. The gain from international migration accrued to migrants through higher wages. For example, remittances are centered on the idea that temporary migration can be a starting point of any development strategy. Panagariya (2006), States that with better economic financing persons in the less developed countries will become more proficient in the use of technology which is benefiting the economy. Migration offers a means to work abroad as such, job vacancies and skill gaps can be filled ensuring that opportunities will be available for