IDEAS home Printed from https://ideas.repec.org/a/jso/coejbm/v2y2014i4p302-315.html

Impacts of Microfinance Institutions: Issues and Concepts-An Empirical Study on Sri Lankan Context

Author

Listed:
  • RathiraneeYogendrarajah

    (University of Jaffna, Sri Lanka)

Abstract

Micro Finance Institutions (MFIs) Provide financial and non financial services to the poor people in developing countries for their income generating activities as well as in Sri Lanka. It can be divided into different legal categories depending on the country in which the institution is based. An MFI could be aNon Government Organization (NGO), a credit cooperative or a non-bank financial institution and Community Based Organizations (CBOs). It has dual objectives which are both social and financial. The social objectives mean that the MFI contributes to improvement and alleviating poverty. The financial objectives focus that the MFI must keep enough profit for their sustainability.MFIs providefinancial, social intermediation, entrepreneurship development and social services to the clients for achieving the social objectives. Microfinance in Sri Lanka has a long history and MFIs are established in all forms and dimensions and it can differ in size, practice, legal act, strategy and budget. The reliability is important to the microfinance system and it determines how smoothly an MFI operates. The aim of this study is to examine the impacts of MFIs in Sri Lanka at household level and community level. This concept paper focuses on a review of academic literature on impacts of various activities when it provides services to the clients. The research designs both combining quantitative and qualitative tools are used. For this purpose, previous studies from developed and developing countries on this regards have been examined and then found out the solutions from the literatures that were the secondary data on which have been derived from reports, documents and research papers of NGOs, government departments and MFIs etc., In addition to this, the primary datawas gathered through the direct personal interviews (questionnaires) from the clients of MFIs such as Samurthi, Women rural development societies(WRDS) and Thrift Cooperative Credit Societies (TCCSs)who are living in the rural areas of Valikamam North and East Divisional Secretariat (DS) Divisions and Thenmaradchi DS Divisions have been selected. With the history of MF in Sri Lanka, the concepts such as Governance, clients, operations and products have been explained and challenges or issues facing MFIs were taken into account for the investigation of the MFIs in Sri Lanka. Finally it was concluded from the comprehensive literatures and observed primary data gathered from the study area, that the impact of MF is significant at household and community level. Further, the women empowerment is significant impact on MF since most of the clients of MFIs are women. However, micro credit has negative impacts on people’s feeling because most people are more concerned about paying back the loan and they expect the marketing and financial difficulties with the increasing cost of living in Sri Lanka.

Suggested Citation

  • RathiraneeYogendrarajah, 2014. "Impacts of Microfinance Institutions: Issues and Concepts-An Empirical Study on Sri Lankan Context," Journal of Business & Management (COES&RJ-JBM), , vol. 2(4), pages 302-315, October.
    • Handle: RePEc:jso:coejbm:v:2:y:2014:i:4:p:302-315
    as

    Download full text from publisher

    File URL: http://centreofexcellence.net/J/JBM/Vol2/No4/Article3,pp.302-315.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jain, Sanjay & Mansuri, Ghazala, 2003. "A little at a time: the use of regularly scheduled repayments in microfinance programs," Journal of Development Economics, Elsevier, vol. 72(1), pages 253-279, October.
    2. Pitt, M.M. & Khandker, S.R., 1996. "Household and Intrahousehold Impact of the Grameen Bank and Similar Targeted Credit Programs in Bangladesh," World Bank - Discussion Papers 320, World Bank.
    3. Sajjad Zohir & Imran Matin, 2004. "Wider impacts of microfinance institutions: issues and concepts," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(3), pages 301-330.
    4. S.P. Premaratne, 2011. "Household Labour Supply in Sri Lanka for Urban Young Couple with Pre-school Children," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 12(2), pages 323-338, September.
    5. Simanowitz, Anton & Walter, Alice, 2002. "Ensuring Impact : Reaching the Poorest While Building Financially Self-Sufficient Institutions, and Showing Improvement in the Lives of the Poorest Families: Summary of Article Appearing in Pathways Out of Poverty: Innovations in Microfinance for the," Occasional Papers 23745, University of Sussex, Imp-Act: Improving the Impact of Microfinance on Poverty: Action Research Program.
    6. James C. Brau & Gary M. Woller, 2004. "Microfinance: A Comprehensive Review of the Existing Literature," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 9(1), pages 1-28, Spring.
    7. Jonathan Morduch, 1995. "Income Smoothing and Consumption Smoothing," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 103-114, Summer.
    8. McGregor, J. Allister & Mosley, Paul & Johnson, Susan & Simanowitz, Anton, 2000. "How Can Impact Assessment Take Into Account Wider Social and Economic Impacts?," Working Papers 23747, University of Sussex, Imp-Act: Improving the Impact of Microfinance on Poverty: Action Research Program.
    9. Goetz, Anne Marie & Gupta, Rina Sen, 1996. "Who takes the credit? Gender, power, and control over loan use in rural credit programs in Bangladesh," World Development, Elsevier, vol. 24(1), pages 45-63, January.
    10. Morduch, Jonathan, 1999. "Between the State and the Market: Can Informal Insurance Patch the Safety Net?," The World Bank Research Observer, World Bank, vol. 14(2), pages 187-207, August.
    11. repec:pri:rpdevs:morduch_microfinance_poor is not listed on IDEAS
    12. Jonathan Morduch, 1998. "Does Microfinance Really Help the Poor? New Evidence from Flagship Programs in Bangladesh," Working Papers 198, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sajjad Zohir & Imran Matin, 2004. "Wider impacts of microfinance institutions: issues and concepts," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(3), pages 301-330.
    2. Islam, Asadul & Nguyen, Chau & Smyth, Russell, 2015. "Does microfinance change informal lending in village economies? Evidence from Bangladesh," Journal of Banking & Finance, Elsevier, vol. 50(C), pages 141-156.
    3. Islam, Asadul & Maitra, Pushkar, 2012. "Health shocks and consumption smoothing in rural households: Does microcredit have a role to play?," Journal of Development Economics, Elsevier, vol. 97(2), pages 232-243.
    4. Duvendack, Maren & Palmer-Jones, Richard, 2011. "The microfinance of reproduction and the reproduction of microfinance: understanding the connections between microfinance, empowerment, contraception and fertility in Bangladesh in the 1990s," MPRA Paper 32384, University Library of Munich, Germany.
    5. Piot-Lepetit, Isabelle & Nzongang, Joseph, 2014. "Financial sustainability and poverty outreach within a network of village banks in Cameroon: A multi-DEA approach," European Journal of Operational Research, Elsevier, vol. 234(1), pages 319-330.
    6. Jin, Ling & Chen, Kevin Z. & Yu, Bingxin & Filipski, Mateusz, 2015. "Farmers' Coping Strategies against an Aggregate Shock: Evidence from the 2008 Sichuan Earthquake," 2015 Conference, August 9-14, 2015, Milan, Italy 211814, International Association of Agricultural Economists.
    7. Pierre Dubois & Bruno Jullien & Thierry Magnac, 2008. "Formal and Informal Risk Sharing in LDCs: Theory and Empirical Evidence," Econometrica, Econometric Society, vol. 76(4), pages 679-725, July.
    8. Schreiner, Mark & Woller, Gary, 2003. "Microenterprise Development Programs in the United States and in the Developing World," World Development, Elsevier, vol. 31(9), pages 1567-1580, September.
    9. Arun, Thankom Gopinath & Bendig, Mirko, 2010. "Risk Management among the Poor: The Case of Microfinancial Services," IZA Discussion Papers 5174, IZA Network @ LISER.
    10. Arghya Kusum Mukherjee & Amit Kundu, 2012. "Swarnajayanti Gram Swarojgar Yojona as a Safety Net: Evidence from Murshidabad District of West Bengal," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 35(1), pages 79-103.
    11. Hoddinott, John & Kinsey, Bill, 2000. "Adult health in the time of drought," FCND discussion papers 79, International Food Policy Research Institute (IFPRI).
    12. Chin, Yoo-Mi, 2012. "Credit Program Participation and Decline in Violence: Does Self-Selection Matter?," World Development, Elsevier, vol. 40(8), pages 1690-1699.
    13. Stefan Dercon & Pramila Krishnan, 2003. "Food aid and informal insurance," CSAE Working Paper Series 2003-01, Centre for the Study of African Economies, University of Oxford.
    14. Jeffrey A. Flory, 2011. "Micro-Savings & Informal Insurance in Villages: How Financial Deepening Affects Safety Nets of the Poor, A Natural Field Experiment," Working Papers 2011-008, Becker Friedman Institute for Research In Economics.
    15. Løvendal, Christian Romer & Knowles, Marco, "undated". "Tomorrow's hunger: a framework for analysing vulnerability to food insecurity," ESA Working Papers 289071, Food and Agriculture Organization of the United Nations, Agricultural Development Economics Division (ESA).
    16. Beegle, Kathleen & Dehejia, Rajeev H. & Gatti, Roberta, 2006. "Child labor and agricultural shocks," Journal of Development Economics, Elsevier, vol. 81(1), pages 80-96, October.
    17. Moses A. Ofeh & Zangue Nguekeu Jeanne, 2017. "Financial Performances of Microfinance Institutions in Cameroon: Case of CamCCUL Ltd," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(4), pages 207-224, April.
    18. Mohammad Shahjahan Chowdhury & Faisal Ahmmed & Md. Ismail Hossain, 2020. "Conditionalities of Public Microfinance and the Rural Poor: Voices From the Below," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(4), pages 526-542, May.
    19. Maitra, Pushkar & Mitra, Sandip & Mookherjee, Dilip & Motta, Alberto & Visaria, Sujata, 2017. "Financing smallholder agriculture: An experiment with agent-intermediated microloans in India," Journal of Development Economics, Elsevier, vol. 127(C), pages 306-337.
    20. Mesbahuddin Ahmed & Anu Muhammad Anisur Rahman & Most Nilufa Khatun, 2020. "Empowerment of the Extreme Poor Women through Microfinance: Evidence from Northern Part of Bangladesh," Journal of Contemporary Research in Social Sciences, Michael Laurence, vol. 2(4), pages 68-80.

    More about this item

    Keywords

    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jso:coejbm:v:2:y:2014:i:4:p:302-315. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: COES&RJ LLC. Maintainer-Workplace-Name: Centre of Excellence for Scientific & Research Journalism - COES&RJ LLC Maintainer-Address: 10685-B Hazelhurst Dr., Houston, TX 77043, USA The email address of this maintainer does not seem to be valid anymore. Please ask COES&RJ LLC. Maintainer-Workplace-Name: Centre of Excellence for Scientific & Research Journalism - COES&RJ LLC Maintainer-Address: 10685-B Hazelhurst Dr., Houston, TX 77043, USA to update the entry or send us the correct address or the person in charge The email address of this maintainer does not seem to be valid anymore. Please ask the person in charge to update the entry or send us the correct address (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.