Microfinance Market Diagnoses and Beneficiaries Impact - Case of Albania

Small and micro entrepreneurs are often considered as a risky client group for banks, because they lack collateral or the capacity to convince banks that they are able to get and repay a business loan. The most important barrier to new business formation is the inability of entrepreneurs to acquire the capital necessary to start a business. Microfinance has proven to be an effective and powerful tool for poverty reduction. For this reason the microfinance policies intended to meet the needs of economically marginalized households and must carefully define the development challenge if they are to be effective. MFIs in Europe reported disbursing a total of 204,080 microloans (122,370 in the European Union) during 2011. In USA, for start-ups, receiving a microcredit increases their probability of survival by 44%. About one fifth of the world’s population lives in poverty, and approximately 2.5 billion adults lack a formal bank account according to some estimation. In developed countries as well, microfinance is increasingly being perceived as a potentially effective tool to counteract on the effects of the social and economic crisis. The aim of this research is to diagnose the attitude and perceptions towards microfinance in Albania, mainly those who are influenced in some way by MFIs, by providing evidence to analyze how microfinance service in Albania has contributed to poverty reduction, how and to what level the microfinance service has affected Albanian entrepreneurial activity, how these entrepreneurial business activities can benefit by using it. The methodology combines the application of both quantitative and qualitative tools. Questionnaires, Focus Group interviews and Semi-structured interviews are used to understand the situations that people face and how they use and perceive microfinance, how do they benefit from this sector, especially enterprises served by microfinance institutions in Albania.