Table of ContentsAbstract.......................................................................................................................................................3

Introduction.................................................................................................................................................3

Purpose Statement......................................................................................................................................4

Objective.....................................................................................................................................................4

Significance of Study....................................................................................................................................5

Research Question and Hypothesis.............................................................................................................5

Research Question...................................................................................................................................5

Research Hypothesis...............................................................................................................................5

Literature Review........................................................................................................................................5

impact on measures of health, education, or women.s decision-making..................................................6

depth. I show how to use the framework for BancoSol of Bolivia...........................................................6

dominant gender ideologies.....................................................................................................................7

referees. All views and errors are our own..............................................................................................7

financial services on a sustainable basis and on a massive scale.............................................................9

but also the local economy....................................................................................................................10

new loans at the branch office...............................................................................................................10

Summary. Ð Micro®nance programs and institutions are increasingly important in development.......10

practise..................................................................................................................................................12

access to financial services (Bhatta, 2001)............................................................................................13

Model........................................................................................................................................................13

Data/ Methodology...................................................................................................................................13

Data...........................................................................................................................................................13

Methodology.............................................................................................................................................14

Descriptive Statistics:.................................................................................................................................14

Inferential Statistics:..............................................................................................................................14

Limitation and Delimitation.......................................................................................................................14

Limitation:.............................................................................................................................................14

Delimitation:..........................................................................................................................................14

References.................................................................................................................................................15

DAVID HULME...................................................................................................................................15

January 2003..........................................................................................................................................15

January 2003..........................................................................................................................................15

Jonathan Morduch.................................................................................................................................15

University of Manchester, Manchester, UK..........................................................................................15

Reza Daniels..........................................................................................................................................15

Chris D. Gingrich..................................................................................................................................15

Patrick Meagher, Vicki Bogan¤, Willene Johnson, and Nomathemba Mhlangay..................................15

Abstract

Wide agreement about the goal of microfinance to improve the welfare of the poor has not led to

wide agreement about how best to achieve that goal. To aid discussion, I propose a framework

for outreach the social benefits of microfinance in terms of six aspects: worth, cost, depth,

breadth, length, and scope. The framework encompasses both the poverty approach to

microfinance and the self-sustainability approach. The poverty approach assumes that great

depth of outreach can compensate for narrow breadth, short length, and limited scope. The self-

sustainability approach assumes that wide breadth, long length, and ample scope can compensate

for shallow depth.

Introduction

Wide agreement about the goal of microfinance—to improve the welfare of the poor—has not

led to wide agreement about how best to achieve that goal. To aid discussion, I propose a

framework for outreach—the social benefits of microfinance—in terms of six aspects: worth,

cost, depth, breadth, length, and scope. The framework encompasses both the poverty approach

to microfinance and the self-sustainability approach. The poverty approach assumes that great

depth of outreach can compensate for narrow breadth, short length, and limited scope. The self-

sustainability approach assumes that wide breadth, long length, and ample scope can compensate

for shallow depth. I show how to use the framework for BancoSol of Bolivia

Policy makers increasingly rely on theories of social capital to fashion development interventions

that mobilize local social networks in the alleviation of poverty. The potential of such theor y lies

in its recognition of the social dimensions of economic growth. This recognition has inspired

some innovative approaches to development, such as the now-popular micro.nance model. In

assessing the implications of these recent developments for feminist objectives of social

transformation, this paper evaluates prevailing ideas about social capital (rooted in rational

choice theor y) against the grain of three alternative approaches: Marxian social capital theories

(à la Pierre Bourdieu), neo-Foucauldian governmentality studies, and my feminist ethnographic

research on the social embeddedness of economic practice in a merchant community of Nepal.

The paper concludes by bringing these critical insights to bear on possibilities for designing

micro. nance programs – and practicing a kind of development more generally – that could

engage women’s solidarity to challenge dominant gender ideologies.

This note focuses on the ‘downside’ of microfinance: on the way in which some microfinance

activities can damage the prospects of poor people. It is not a polemic that argues that

microfinance has failed—there is much evidence, not least from my work with colleagues, that it

can help many poor people improve their lives. Rather, it is a reminder that those who provide

microfinancial services (referred to here as MFIs, or microfinance institutions, but recognizing

that many institutions also provide enterprise development or social development services) need

to monitor carefully not only their positive impacts but also their negative effects, look to the

future, and not rest on their laurels. The ‘microfinance industry’ needs to practice more humility

about what it has achieved (outside of Bangladesh it has not even scratched the surface of

poverty, for example in Kenya less than 70 000 people out of an estimated 9 to 10 million poor

people have access to microfinance) and deepen its understanding of the financial service needs

of poor people (see Rutherford in this issue).

Purpose Statement The purpose of this study is to describe the factors that effect the micro finance. and explain the relationship between factors and micro finance. in factors involve saving, interest rate and income etc. micro finance is much important for poor peoples because due to micro finanace they get money.

Objective

To examine the Impact of factors on micro finance

Significance of Study This study is helpful for manager they can control on affecting factors.

This study is helpful for policy makers they take a better decision for micro financing.

This study will be helpful for researcher they can get the information about factors of micro

finance.

Research Question and Hypothesis

Research Question

What is the impact of affecting factors on micro financing?

Research Hypothesis

H0: There is relationship between micro finanace and affecting factors

H1: There is no relationship between micro finance and affecting factors

Literature Review Microcredit has spread extremely rapidly since its beginnings in the late 1970s, but

whether and how much it helps the poor is the subject of intense debate. This paper reports

on the .rst randomized evaluation of the impact of introducing microcredit in a new market.

Half of 104 slums in Hyderabad, India were randomly selected for opening of an MFI branch

while the remainder were not. We show that the intervention increased total MFI borrowing,

and study the e¤ects on the creation and the pro.tability of small businesses, investment,

and consumption. Fifteen to 18 months after lending began in treated areas, there was no

e¤ect of access to microcredit on average monthly expenditure per capita, but expenditure

on durable goods increased in treated areas and the number of new businesses increased by

one third. The e¤ects of microcredit access are heterogeneous: households with an existing

business at the time of the program invest more in durable goods, while their nondurable

consumption does not change. Households with high propensity to become new business

owners increase their durable goods spending and see a decrease in nondurable consumption,

consistent with the need to pay a .xed cost to enter entrepreneurship. Households with

low propensity to become business owners increase their nondurable spending. We .nd no

impact on measures of health, education, or women.s decision-making.

Leading advocates for micro®nance have put forward an enticing ``win-win''

proposition: micro®nance institutions that follow the principles of good banking will also be

those that alleviate the most poverty. This vision forms the core of widely-circulated ``best

practices,'' but as a general proposition the vision is fully supported neither by logic nor by the

available empirical evidence. Recognizing the limits to the win-win proposition is an important

step toward reaching a more constructive dialogue between micro®nance advocates that

privilege ®nancial development and those that privilege social impact

Wide agreement about the goal of microfinance—to improve the welfare of the

poor—has not led to wide agreement about how best to achieve that goal. To aid

discussion, I propose a framework for outreach—the social benefits of microfinance—in

terms of six aspects: worth, cost, depth, breadth, length, and scope. The framework

encompasses both the poverty approach to microfinance and the self-sustainability

approach. The poverty approach assumes that great depth of outreach can compensate

for narrow breadth, short length, and limited scope. The self-sustainability approach

assumes that wide breadth, long length, and ample scope can compensate for shallow

depth. I show how to use the framework for BancoSol of Bolivia

Policy makers increasingly rely on theories of social capital to fashion development

interventions that mobilize local social networks in the alleviation of

poverty. The potential of such theor y lies in its recognition of the social dimensions

of economic growth. This recognition has inspired some innovative

approaches to development, such as the now-popular micro.nance model. In

assessing the implications of these recent developments for feminist objectives

of social transformation, this paper evaluates prevailing ideas about social

capital (rooted in rational choice theor y) against the grain of three alternative

approaches: Marxian social capital theories (à la Pierre Bourdieu), neo-Foucauldian

governmentality studies, and my feminist ethnographic research on

the social embeddedness of economic practice in a merchant community of

Nepal. The paper concludes by bringing these critical insights to bear on possibilities

for designing micro. nance programs – and practicing a kind of

development more generally – that could engage women’s solidarity to challenge

dominant gender ideologies.

Microlending is growing in Eastern Europe, Russia and China as a flexible means to widen

access

to financial services, both to help alleviate poverty and to encourage private-sector activity. We

describe mechanisms that allow these programs to successfully penetrate new segments of credit

markets. These features include direct monitoring, regular repayment schedules, and the use of

non-refinancing threats. These mechanisms allow the programs to generate high repayment rates

from low-income borrowers without requiring collateral -- and without using group lending

contracts that feature joint liability.

We appreciate comments from Jonathan Conning, discussions with Albert Park, Elizabeth

Wallace,

Michael Taylor, Mark Schreiner, and Craig Churchill, and useful suggestions from two

anonymous

referees. All views and errors are our own.

This note focuses on the ‘downside’ of microfinance: on the way in which some microfinance

activities can damage the prospects of poor people. It is not a polemic that argues that

microfinance has failed—there is much evidence, not least from my work with colleagues, that it

can help many poor people improve their lives. Rather, it is a reminder that those who provide

microfinancial services (referred to here as MFIs, or microfinance institutions, but recognizing

that many institutions also provide enterprise development or social development services) need

to monitor carefully not only their positive impacts but also their negative effects, look to the

future, and not rest on their laurels. The ‘microfinance industry’ needs to practice more humility

about what it has achieved (outside of Bangladesh it has not even scratched the surface of

poverty, for example in Kenya less than 70 000 people out of an estimated 9 to 10 million poor

people have access to microfinance) and deepen its understanding of the financial service needs

of poor people (see Rutherford in this issue).

The United Nations Millennium Development Goals (MDGs) have galvanized the development

community with an urgent challenge to improve the welfare of the world's neediest people.

Donor

agencies are orienting their programming around the attainment of the MDGs and are mobilizing

new resources to reduce hunger and poverty, eliminate HIV/AIDS and infectious diseases,

empower women and improve their health, educate all children, and lower child mortality.1

The MDGs are framed as concrete outcomes in the areas of nutrition, education, health, gender

equity, and environment. Thus work in these specific areas will be a large part of any

development strategy driven by the MDGs. But decades of experience has shown that that

progress in these areas is powerfully affected by other factors in the broader context, such as a

functioning government, physical security, economic growth, security, and basic infrastructure

(for

example, transportation). This paper reviews the mounting body of evidence showing that the

availability of financial services for poor households ("microfinance") is a critical contextual

factor

with strong impact on the achievement of the MDGs.

Microfinance, and the impact it produces, go beyond just business loans. The poor use financial

services not only for business investment in their microenterprises but also to invest in health and

education, to manage household emergencies, and to meet the wide variety of other cash needs

that they encounter. The range of services includes loans, savings facilities, insurance, transfer

payments, and even micro-pensions. Evidence from the millions of microfinance clients around

the world demonstrates that access to financial services enables poor people to increase their

household incomes, build assets, and reduce their vulnerability to the crises that are so much a

part of their daily lives. Access to financial services also translates into better nutrition and

improved health outcomes, such as higher immunization rates. It allows poor people to plan for

their future and send more of their children to school for longer. It has made women clients more

confident and assertive and thus better able to confront gender inequities.

Microfinance clients manage their cash flows and apply them to whatever household priority

they

judge most important for their own welfare. Thus microfinance is an especially participatory and

non-paternalistic development input. Access to flexible, convenient, and affordable financial

services empowers and equips the poor to make their own choices and build their way out of

poverty in a sustained and self-determined way.

Microfinance is unique among development interventions: it can deliver these social benefits on

an ongoing, permanent basis and on a large scale. Many well-managed microfinance institutions

throughout the world provide financial services in a sustainable way, free of donor support.

Microfinance thus offers the potential for a self-propelling cycle of sustainability and massive

growth, while providing a powerful impact on the lives of the poor, even the extremely poor.

Evidence shows that this impact intensifies the longer clients stay with a given program, thus

deepening the power of this virtuous cycle.

Unfortunately poor people in most countries have virtually no access to formal financial services.

Their informal alternatives such as family loans, savings clubs, or moneylenders are usually

limited by amount, rigidly administered, or available only at exorbitant interest rates. The

challenge ahead is to ensure access to financial services for the poor majority.

This note reviews the evidence on the impact of microfinance as it relates to the attainment of the

MDGs.2 Specifically it assesses impact in the areas of eradicating poverty, promoting children's

education, improving health outcomes for women and children, and empowering women.

Finally,

the note addresses the feasibility of reaching significant numbers of the absolute poor with

financial services on a sustainable basis and on a massive scale

Microfinance supports mainly informal activities that often have a low return and low

market demand. It may therefore be hypothesized that the aggregate poverty impact of

microfinance is modest or even nonexistent. If true, the poverty impact of microfinance

observed at the participant level represents either income redistribution or short-run

income generation from the microfinance intervention. This article examines the effects

of microfinance on poverty reduction at both the participant and the aggregate levels

using panel data from Bangladesh. The results suggest that access to microfinance

contributes to poverty reduction, especially for female participants, and to overall

poverty reduction at the village level. Microfinance thus helps not only poor participants

but also the local economy.

Once every week in villages throughout Bangladesh, groups of forty villagers meet

together for half an hour or so, joined by a loan officer from a microfinance organization.

The loan officer sits in the front of the group (the “center”) and begins his business.1 The

large group of villagers is sub-divided into eight five-person groups, each with its own

chairperson, and the eight chairs, in turn, hand over their group’s passbooks to the

chairperson of the center, who then passes the books to the loan officer. The loan officer

duly records the individual transactions in his ledger, noting weekly installments on loans

outstanding, savings deposits, and fees. Quick arithmetic on a calculator ensures that the

totals add up correctly, and, if they do not, the loan officer sorts out discrepancies.

Before leaving, he may dispense advice and make arrangements for customers to obtain

new loans at the branch office.

Summary. Ð Micro®nance programs and institutions are increasingly important in development

strategies but knowledge about their impacts is partial and contested. This paper reviews the

methodological options for the impact assessment (IA) of micro®nance. Following a discussion

of the varying objectives of IA it examines the choice of conceptual frameworks and presents

three paradigms of impact assessment: the scienti®c method, the humanities tradition and

participatory learning and action (PLA). Key issues and lessons in the practice of micro®nance

IAs are then explored and it is argued that the central issue in IA design is how to combine

di€erent methodological approaches so that a ``®t'' is achieved between IA objectives, program

context and the constraints of IA costs, human resources and timing. The conclusion argues for a

greater focus on internal impact monitoring by micro®nance institutions. Ó 2000 Elsevier

Science Ltd.

ABOUT ONE billion people globally live in households with per capita incomes of under one

dollar per day. The policymakers and practitioners who have been trying to improve the lives of

that billion face an uphill battle. Reports of bureaucratic sprawl and unchecked corruption

abound. And many now believe that government assistance to the poor often creates dependency

and disincentives that make matters worse, not better. Moreover, despite decades of aid,

communities and families appear to be increasingly fractured, offering a fragile

foundation on which to build. Amid the dispiriting news, excitement is building about a set of

unusual financial institutions prospering in distant

corners of the world—especially Bolivia, Bangladesh, and Indonesia. The hope is that much

poverty can be alleviated— and that economic and social structures can be transformed

fundamentally— by providing financial services to low-income households. These institutions,

united under the banner of microfinance, share a commitment to serving clients that have been

excluded from the formal banking sector. Almost all of the borrowers do so to finance self-

employment activities, and many start by taking loans as small as $75, repaid

over several months or a year. Only a few programs require borrowers to put up collateral,

enabling would-be entrepreneurs with few assets to escape positions as poorly paid wage

laborers or farmers.

This paper will evaluate the micro-finance sector in South Africa, its scope and

development, and its role in the financial sector and the economy more generally. It is

informed by the premise that households and institutions save and invest

independently, and that the financial system’s role is to intermediate between them

and to cycle available funds to where they are needed. Consequently the primary

objective of this paper is to understand the key factors that affect the micro-finance

(MF) sector.

The MF industry was formally (legally) established in 1992 when the state issued an

Exemption to the Usury Act that removed interest rate ceilings on small loans under

R6,000.00 with a repayment period of less than thirty-six months. Since then there has

been phenomenal growth of a formally non-existent industry, providing a good

example of how micro-financiers were able to develop given a favourable incentive

system. The rapid growth of the industry provided the impetus for a second

Exemption to the Usury Act in 1999, where revisions to the amount of small loans

were increased from R6,000.00 to R10,000.00, the Micro Finance Regulatory Council

(MFRC) was established to manage the sector, and new regulations to govern the way

that micro-loans could be administered and repayments collected were added.

However, the growth of the industry has raised as many questions of the financial

sector’s operation as it has answered those concerning a conducive regulatory climate.

Firstly, why has there been such rapid growth in the industry given that SA has a

fairly sophisticated financial sector in the first place? Partly related to this is the

question of who are the end-users of the loans supplied by the MF industry. Put

differently, we need to understand the determinants of the demand for debt, and the

segment of society who demands the services supplied by the MF industry. We then

need to analyse the parameters of the regulatory framework and identify how lenders

are affected by it. Lastly we will provide insights into the structure and performance

of the sector in an attempt to augment the discussion.

The rest of the paper proceeds as follows. Firstly, the depth, structure and efficiency

of South Africa’s financial sector are discussed in comparative perspective in order to

contextualise the discussion. Secondly, the structure and size of the industry are

estimated. We then proceed to investigate the demand for debt using the Income and

Expenditure Survey (Statistics South Africa, 1995) and an adjusted dataset compiled

by Wefa Southern Africa for 1999. Lastly, we turn our attention to the regulatory

framework of the sector and the degree to which it complies with international best

practise.

limits agricultural investment options. The country is currently

plagued by political instability, including a Maoist insurgency. In

addition, formal financial markets fail to reach most poor households.

According to one recent estimate (CECI, 2001), only

10% of rural households can access formal financial markets.

Many government and nongovernment agencies implement a

variety of microfinance programs to increase poor households’

access to financial services (Bhatta, 2001)

This baseline study examines the key elements of Malawi’s enabling environment for

microfinance. It deals with several challenges in Malawi’s enabling environment as it relates to

financial services, with the central focus on those issues most relevant to the innovations being

rolled out by Opportunity International Bank of Malawi (OIBM) with the support of the Bill and

Melinda Gates Foundation. We compare the quality of the enabling environment, its overall

costs and benefits in comparison to alternatives with similarly situated countries. We analyze a

few of the enabling environment challenges, including but are not limited to; an adverse credit

culture, conservative banking sector, governance challenges, regulation of microfinance, lack of

national identity documentation and of information systems supporting commercial finance.

Model

Factors of affecting

Micro finance

Data/ Methodology

Data In this study data is used of twenty five companies from Lahore stock exchange.

Methodology

Descriptive Statistics:

Descriptive statistics is the discipline of quantitatively describing the main features of a

collection of data. Descriptive statistics are distinguished from inferential statistics, in that

descriptive statistics aim to summarize a data set, rather than use the data to learn about the

population that the data are thought to represent.

Inferential Statistics:

“.Inferential statistics are for generalizing your findings to a broader population group.” In

inferential statistics we extend your conclusions to a broader population, like all workers, all

women

In this study we used descriptive statistics and inferential statistics . Data analyzed through

Histogram, Descriptive Statistics, Single Box Plot, Correlation and Regression.

Limitation and Delimitation

Limitation: There are some limitations in conducting the research.

Limited financial resources

lack of resources for conducting survey

Conducted only in Lahore

Delimitation: This research is restricted within Lahore.

References ABHIJIT BANERJEE ESTHER DUFLO RACHEL GLENNERSTER CYNTHIA KINNAN,

JONATHAN MORDUCH* Princeton University, New Jersy, USA

Mark Schreiner June 2002

Katharine N. Rankin

Beatriz Armendariz & Jonathan Morduch April 2000

DAVID HULME

Elizabeth Littlefield, Jonathan Murduch, and Syed Hashemi

January 2003

Elizabeth Littlefield, Jonathan Murduch, and Syed Hashemi

January 2003

Beatriz Armendáriz de Aghion

Jonathan Morduch

DAVID HULME *

University of Manchester, Manchester, UK

Jonathan Morduch1

Reza Daniels

Chris D. Gingrich

Patrick Meagher, Vicki Bogan¤, Willene Johnson, and Nomathemba Mhlangay