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An Investigation into the Influence and Role of Microfinance in Developed and Developing Economies (2015)

The uptake of microfinance and role of microfinance institutions is an ongoing debate over the years. To date, microfinance institutions served million of poor people by providing them easy access to loans with better repayment rates, and also improving their health and welfare. But on the other hand, the growing interest in microfinance schemes in developing and developed economies raised many issues. The purpose of this dissertation is twofold.

First, this study is significant in addressing the incompetence of microfinance institutions in reaching the ‘core poor’ by uncovering the factors that obstruct the implementation and growth of microfinance. Secondly, a cross-country comparison among 3 Asian developing countries (Bangladesh, Pakistan, and India) and 2 developed countries (UK and USA) is conducted to evaluate the effectiveness and productivity of their microfinance institutions in reaching and serving low income people. In order to achieve the objectives of this study, the attempt is made to collect microfinance data for six years from 2006 to 2011.

The findings of the study reveal that Bangladesh and India are comparatively ahead of other countries in serving poor people by providing them microfinance services. Similarly, on the basis of ten most important microfinance indicators, it is concluded that MFIs in both developed countries i.e. UK and USA lack in performance, outreach, financial stability, and costs compared to the developing countries particularly Bangladesh and India. It is believed that this study will be a significant addition to the literature because of cross-country analysis as well as the due to the recommendations made at the end to promote microfinance practices to reduce poverty levels in the world.

This dissertation endeavours to investigate the actual and perceived role of microfinance in reducing the worldwide poverty level. Furthermore, the study also aims to reveal the hidden truth about the success or failure of microfinance institutions in capitalist and developing economies. In order to obtain an accurate picture of microfinance operation, the following objectives are drafted:

  • To investigate general perception of microfinance concept
  • To identify factors that hinder the growth of microfinance systems and institutions
  • To conduct cross-country analysis to explore the true role of microfinance institutions in developed and developing countries
  • To provide recommendations to promote microfinance practices to reduce poverty levels in the world economies
  • 14,000 words – 52 pages in length
  • Excellent use of literature
  • Excellent analysis of subject area
  • Well written throughout
  • Ideal for finance students

1 – Introduction
Background of the Study
Problem Statement
Dissertation Aim and Objectives
Research Questions
Significance of the Study

2 – Literature Review
Global Perception of Microfinance
Microfinance Activities
Microfinance Lending
Microfinance Products and Services
Interest Rates
Role of Microfinance Institutions
Commercial Banks as Formal MFIs
Microfinance in Developing Countries
Microfinance in Developed Countries
Factors Affecting the Growth of Microfinance
Financial Stability
Uncontrolled Growth
Cultural factors
Systematic Fraud
Bureaucracy Barriers
Lack of Credit Rating Agencies
Challenges for Commercial Banks
Methodological Flaws
State Intervention
other factors

3 – Research Methodology
Philosophical Paradigms
Research Design
Research Approach
Qualitative versus Quantitative
Deductive versus Inductive
Research Methods
Case Study Method
Sources of Data collection
Limitations of Secondary Data
Reliability and Validity of Secondary Data
Data Analysis
Study Population
Research Ethics
Resources Used
Research Limitations

4 – Cross-Country Analysis
Data Reliability Analysis
Analysing Gross Loan Portfolio
Analysing Outreach
Borrowings
Number of Active Borrowers
Average Loan Balance per Borrower
Percentage of Female Borrowers
Analysing Financial Stability
Return on Asset (ROA) Ratio
Return on Equity (ROE) Ratio
Deposits to Loan (DTL) Ratio
Analysing Costs
Cost per Borrower
Cost per Loan

5 – Conclusions
Recommendations
Research Limitations
Future Research

References

Appendix

Developed and Developing Economies - Microfinance Dissertation
Developed and Developing Economies – Microfinance Dissertation

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