Journal articles on the topic 'Microfinance institutions'
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1
Dhakal, Chandra Prasad, and Govinda Nepal. "Contribution of Micro-Finance on Socio-Economic Development of Rural Community." Journal of Advanced Academic Research 3, no. 1 (February 11, 2017): 134–41. http://dx.doi.org/10.3126/jaar.v3i1.16623.
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Microfinance institutions are established to promote the financial activities mainly saving and credit in community. Microfinance’s activities are focused on reducing poverty level of community people. Poor, disadvantaged, marginalize and women are in mainstream of microfinance’s programs. The study was focused on finding out the contribution of microfinance on socio-economic development of rural community. The study was based on the quantitative design. Cross-sectional data was collected from the 8 microfinances of Syangja district. Purposive sampling technique was adopted to select the respondents. The perceptual analysis of data reported the significant contribution of micro-finance in social change and development. Microfinances working since 2 to 20 years covering the diverse field of social activities were the samples of the study. There was a need to improve the internal management of microfinance to provide the services more effectively.
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Herry, Ervicaninda, Pramudia Yuli Eka Permana, Wisnu Bayu Aji, and Ridan Muhtadi. "Total Quality Management Development and Sharia Governance Efforts in Sharia Micro Financial Institutions to Improve Market Share." IJIEEB : International Journal of Integrated Education, Engineering and Business 2, no. 1 (March 30, 2019): 27–35. http://dx.doi.org/10.29138/ijieeb.v2i1.809.
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An important pillar in the development of Islamic microfinance institutions is Total Quality Management and Sharia Governance. This pillar is the main differentiator between conventional Islamic finance institutions. Institutional efforts to provide satisfaction to customers. The concept of quality (quality) for service and non-service basically includes various things that are focused on the customer. Shari'ah supervision is needed to ensure the implementation of Shari'ah principles in the financial institution, which is played by the Shari'ah Supervisory Board. Implicitly this shows that the practice of shari'ah microfinance institutions has not been concerned with shari'ah principles and the quality of good governance, one of the causes of reputation and public trust in Islamic microfinance institutions will also have an impact on community loyalty use the services of a Shari'ah microfinance institution. Improved reputation and customer trust can be used as an indicator of the success of the development of Islamic microfinance institutions and at the same time predicting their future success in order to increase market share.
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Njagi, Joram Nyaga, and Charity Njoka. "Microfinance Reforms and Financial Inclusion in Kenya." International Journal of Current Aspects in Finance, Banking and Accounting 3, no. 1 (August 28, 2021): 54–72. http://dx.doi.org/10.35942/ijcfa.v3i1.181.
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Statistics indicate that about 1.7 billion people can’t access a savings account and slightly above 200 million small and medium-sized enterprises are deprived access to satisfactory financial solution. Kenya views microfinances as a development instrument for poverty lessening and economic growth through ensuring financial inclusion. It is due to the acceptance of this vital role of Microfinance that Kenya has undertaken strategic microfinance reforms and regulations aimed at promoting financial inclusion through microfinance business. The research’s general objective is to examine the effect of microfinance reforms on financial inclusion. Specifically, to determine the influence of microfinance transformation from non-deposit taking into a deposit-taking microfinance institutions on financial inclusion, to examine the association between microfinance board characteristics and public trust, to investigate the effect of microfinance licensing requirements on financial inclusion and to examine the effect of microfinance prudential standards requirements on financial inclusion in Kenya. The research adopted Financial Intermediation Theory and Public Interest Theory of Regulation. This research utilized descriptive research design and the population targeted included all the thirteen Microfinance institutions, which were licensed by the central bank of Kenya as at 2018. The study used purposive sampling to select six microfinance banks. Both descriptive and inferential statistics were done by use of multiple linear regression analysis. The research results indicated that microfinance transformation (pvalue=0.001), board characteristics (pvalue=0.042), licensing requirements (pvalue=0.035) and prudential standards (pvalue=0.002) significantly influenced financial inclusion. Results from regression analysis indicated a strong relationship between microfinance transformation, board characteristics, licensing requirements and prudential standards and financial inclusion. The study concluded that financial inclusion in micro financial institutions increases when there is sound microfinance transformation, board characteristics, legal requirements, and prudential standards. From the findings, the study recommended that micro financial institutions should support institutions reform functions and processes. Further the study recommended that micro financial institutions should recruit adequate and proficient workers and offer satisfactory training as well as certification for professional appreciation on strategies for microfinance reform processes and their influence on the financial inclusion of the micro financial institution. The research recommends that board members should be reliable and open so as to substantially contribute to financial performance.
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Muriithi Njue, Alex, Samuel Nduati Kariuki, and Duncan Mugambi Njeru. "Liquidity Management and Financial Performance of Microfinance Institutions in Kenya." Journal of Social Sciences Research, no. 611 (November 19, 2020): 943–53. http://dx.doi.org/10.32861/jssr.611.943.953.
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Sound liquidity management is integral for any financial institution’s stability and profitability, since deteriorating liquidity management is the most frequent cause of poor financial performance. As with any financial institution, the biggest risk in microfinance sector is lending money and not getting it back leading to liquidity problems as most of them have no access to lender of the last resort which is the Central Bank of Kenya. The study sought to investigate the effect of liquidity management on financial performance of microfinance institutions in Kenya. The target population of the study was all the twenty-six microfinance in Kenya that are members of Association of Microfinance Institutions and were licensed by the Central Bank of Kenya as at 2017. A census of all the twenty-six 26 Microfinance Institutions in Kenya was conducted for five years from 2012 to 2016. Secondary data on the study variables was gathered from the audited financial statements of the Microfinance Institutions. The study employed random effect model on a 5-year panel data from 2012 to 2016 on all the 26 Microfinance Institutions in Kenya. The study found a positive relationship between capital adequacy and financial performance and a negative relationship between asset quality, maturity gap and financial performance. The study would help Microfinance Institutions as they would use the research findings to develop liquidity management strategies to enable Microfinance Institutions improve on their financial performance.
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Darwanto, Darwanto. "STRATEGI PENGUATAN MICROFINANCE SYARIAH BERBASIS EKONOMI KELEMBAGAAN." INFERENSI 8, no. 2 (December 1, 2014): 501. http://dx.doi.org/10.18326/infsl3.v8i2.501-522.
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The purpose of this study is to obtain an overview of the sharia microfinance issues, sharia microfinance solutions to solve problems, and institutions strategies for strengthening sharia microfinance. The method used in this study is a qualitativeanalysis method using the tool Analytical Network Process (ANP) is used to find the priority of problems, solutions and strategies for improvement of sharia microfinance institutions. The results of studies suggest that the improvement in sharia microfinance institutions have 4 aspects, those are the problems of the human resource aspects (SDI), infrastructure aspects, market aspects, and management aspects. Aspect of the priority issues in the sharia microfinance institutional improvement is a human resources (SDI), while the improvement solution of sharia microfinance institutional is an aspect of human resources(SDI) as well. Then the strategy which becomes a priority in the improvement of sharia microfinance institutions is the optimization of the board of sharia (DPS)
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D’Espallier, Bert, Marek Hudon, and Ariane Szafarz. "Unsubsidized microfinance institutions." Economics Letters 120, no. 2 (August 2013): 174–76. http://dx.doi.org/10.1016/j.econlet.2013.04.021.
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Agustin, Atut Frida. "PERAN LEMBAGA KEUANGAN MIKRO (LKM) TERHADAP KINERJA EKONOMI KABUPATEN JOMBANG." Jurnal Ekonomi Pembangunan 9, no. 2 (December 1, 2011): 225. http://dx.doi.org/10.22219/jep.v9i2.3676.
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The objective of this study were: 1) To know the potential of Microfinance Institution (LKM) in Jombang Regency, 2) To know the role of Microfinance Institution (LKM) towards economic performance in Jombang Regency, 3)To know the needs of Microfinance Institution (LKM) Development in increasing LKM roles on the Jombang Regency economy. The results showed: First, the overall number of Microfinance Institutions (MFIs) in as many as 425 Jombang spread in 21 regencies. The regency which had LKM at most in Jombang regency for 154, the second was Ngusikan Regency. Second,The results of Econometric analysis were able to concluded that the amount of LKM, LKM capital, and the volume of bussiness impacted to the variable of economic growth in Jombang Regncy. Third, easy and soft loan had a degree of interest by 87% whereas direct aid only had a degree of interest of 13%. Meanwhile, institutions which was more effective to provide capital loans on LKM development was institutional in rural areas, for example, through another microfinance.
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Gassama, Saikou, and Erina Sudaryati. "The Role of Internal Audit Quality to the Sustainability and Success of Microfinance Program." Manajemen Bisnis 12, no. 01 (May 23, 2022): 45–51. http://dx.doi.org/10.22219/mb.v12i01.15642.
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Microfinance institutions are the main source of finance for the poor and the women in many country, therefore the sustainability of these companies is a concern, but that cannot be achieved without proper internal control mechanism to detect any attempt frauds that could harm the operations of microfinance institutions. The research will used literature review method by digging into previous researches to see the main courses of the failure of many microfinance institutions. The research found out that most of the microfinance institution failed due to inadequate control in place to detect malfunctions or fraud at the earlier stages that can safeguard the operations of microfinance institutions.
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Ghising, Tilak. "Social Performance Management and Sustainability of Microfinance Institutions." International Research Journal of MMC 3, no. 4 (October 11, 2022): 17–20. http://dx.doi.org/10.3126/irjmmc.v3i4.48858.
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Social performance management refers to the ability to achieve social goals by putting customers at the center of strategy and operations in microfinance institutions. The social performance of a microfinance institution means its effectiveness in achieving social goals and creating value for customers. This is just one aspect of social performance management. Social performance management examines the whole process through which an effect occurs. In the present study, social performance is considered as an assessment of social goals such as targeting the poor and marginalized, an adaptation of services that deliver economic benefits to customers, and the environment, and employees to improve social responsibility towards customers and the community. The overall performance of microfinance institutions contributes to the long-term sustainability of the organization. Sustainability of microfinance institutions means the long-term continuation of the microfinance program, which includes continuity of financial and non-financial services of microfinance institutions. The sustainability of microfinance institutions are measured by using a portfolio, performance, financial management, and profit-to-financial ratio. In the present study, the sustainability of microfinance considered as a long-term continuation of the program that benefits all stakeholders in the microfinance sector and society. Most microfinance institutions devote their efforts to achieving the social and financial goals of the organization. Social performance facilitates progress in achieving the social goals of microfinance institutions. As such, sustainability is a dynamic concept that aims to meet the expected cost of all programs and return on investment.
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Marakkath, Nadiya. "Innovative strategies devised by Indian microfinance institutions to achieve cost efficiency." International Journal of Finance & Banking Studies (2147-4486) 1, no. 1 (January 21, 2012): 15–20. http://dx.doi.org/10.20525/ijfbs.v1i1.132.
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This study is a discussion on the ‘Non-Governmental Organization-Microfinance Institution Partnership Model’ and ‘Securitization Model’ used by Indian microfinance institutions to achieve cost efficiency. These two models are effective strategies devised and used by efficient and sustainable Indian MFIs to reduce their operating cost and financing cost. Achieving such cost efficiency is crucial for microfinance institutions to attain operational self-sustainability without levying high interest rates. Using interview method the study elicits information on these innovative strategies and recommends them to be worthy of emulation for other microfinance institutions operating in the Indian microfinance industry.
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Okello Candiya Bongomin, George, and John C. Munene. "Examining the role of institutional framework in promoting financial literacy by microfinance deposit-taking institutions in developing economies." Journal of Financial Regulation and Compliance 28, no. 1 (November 18, 2019): 16–38. http://dx.doi.org/10.1108/jfrc-12-2018-0158.
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Purpose This paper aims to examine the role of institutional framework of regulative, normative, and cultural-cognitive in promoting financial literacy by microfinance deposit-taking institutions in developing economies with a specific focus on rural Uganda. Design/methodology/approach Data were collected from a total sample of 400 respondents who are clients of promotion of rural initiatives development enterprises microfinance deposit-taking institution using a questionnaire and analysis of moment structures (AMOS) was adopted to analyze the data to examine the role of institutional framework of regulative, normative, and cultural-cognitive in promoting financial literacy by microfinance deposit-taking institutions in developing economies with a specific focus on rural Uganda. Findings The results indicated that institutional framework of regulative, normative, and cultural-cognitive significantly and positively promotes financial literacy by microfinance deposit-taking institutions in developing economies, especially in rural Uganda. The existence of institutional framework of regulative (codified rules and laws), normative (shared beliefs/values and norms), and cultural-cognitive (shared conception and interpretation) promotes financial literacy by microfinance deposit-taking institutions in rural Uganda. The structural equation model constructed by use of AMOS revealed that the institutional framework of regulative, normative, and cultural-cognitive explains 27 per cent of the variation on the role of microfinance deposit-taking institutions in promoting financial literacy in rural Uganda. Research limitations/implications This study was purely cross-sectional with data collected at a specific point in time. Therefore, future studies through longitudinal research design can be adopted to test for the hypotheses derived under this study. In addition, only quantitative data collected by use of a semi-structured questionnaire was used in this study. Further studies may consider the use of interviews to get in-depth responses from the respondents. Practical implications Advocates of financial literacy programs in developing economies should consider the existence of institutional framework of regulative, normative, and cultural-cognitive, which helps in promoting financial literacy by microfinance deposit-taking institutions. Indeed, the existence of state legislation to teach people about how to manage their money can promote financial literacy. Besides, normative behavior among individuals within a social setting can lead to increased likelihood that they will engage and participate in a particular financial literacy drive. Correspondingly, cognition, especially fluid intelligence that changes as people age may also help individuals to invoke several dimensions of cognitive skills to make informed financial decisions. Originality/value The current study adds to the existing body of knowledge by examining the role of institutional framework of regulative, normative, and cultural-cognitive in promoting financial literacy by microfinance deposit-taking institutions in developing economies. There is deficiency in the link between the institutional framework under the theory of institutions and financial literacy, especially in developing economies where there is great need for financial literacy among the poor.
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JAFFERY, ADA, and DAWOOD MAMOON. "MICROFINANCE; A POVERTY REDUCTION TOOL, SOCIO-ECONOMIC PROSPECTIVE." Journal of Management and Research 1, no. 2 (November 29, 2019): 1–5. http://dx.doi.org/10.29145/jmr/12/0102004.
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This paper aims to critically evaluate the microfinance approach in social and economic perspective. Critical analysis reveals that microfinance can be used as an efficient tool to reduce poverty, thus contributing towards economic as well as social development. Moreover, paper highlights the role of institutional design and indicates that microfinance institutions working on the lines of non government organizations and following the double bottom line approach performs better than the other institutional frameworks. Joint liability and the role of group leader are eminent in enhancing the performance of these institutions. Poverty can be decreased if microfinance institutions are driven in a more systematic manner keeping in mind primarily the well being of society.
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Badina, Tenny, and Rita Rosiana. "Peran Lembaga Keuangan Mikro Islam dalam Meningkatkan Kesejahteraan Pengusaha Mikro." Jurnal Ilmiah Ekonomi Islam 8, no. 1 (March 8, 2022): 430. http://dx.doi.org/10.29040/jiei.v8i1.3904.
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The purpose of this study is to analyze the structure and development as well as the problems and challenges faced by Islamic microfinance institutions in improving the socio-economic welfare of Islamic micro-entrepreneurs in the province of Banten. Islamic microfinance institutions have a social purpose in addition to the goal of obtaining profits that can be utilized by micro-entrepreneurs to develop their businesses. Islamic microfinance institutions have the potential to act as a mechanism for banking institutions. Data were analyzed based on micro-entrepreneurs with field survey methods and descriptive analysis. Field visits and interviews will be organized and conducted face-to-face with the manager of the microfinance institution. In the semi-structured interview process, respondents were asked to express their views on the research problem. It is hoped that the results of this study will obtain opinions from respondents regarding the role of Islamic microfinance intitutions in (1) improving the socio-economic welfare of micro entrepreneurs, (2) problems faced by microfinance institutions in distribute financing to micro-entrepreneurs. In general, respondents thinks that operations in Islamic microfinance institutions are currently not optimal due to several existing limitations. Respondents strongly agree that Islamic microfinance institutions should provide products, services, and instruments
to respond to the needs of the poor in overcoming poverty and of course the services, products, and instruments offered must be distinguishable from other services, products, and instruments.
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Bakker, Anuschka, Jaap Schaveling, and André Nijhof. "Governance and microfinance institutions." Corporate Governance 14, no. 5 (September 30, 2014): 637–52. http://dx.doi.org/10.1108/cg-03-2014-0032.
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Purpose – This paper aims to determine the influence of governance mechanisms on sustainability and outreach of microfinance institutions (MFIs). Corporate governance has been identified as a key bottleneck in strengthening MFIs’ sustainability (financial performance) and increasing their outreach (social impact). Design/methodology/approach – First, a literature study to give insight in the microfinance sector is provided. Subsequently, the data research has been performed based on the statistics of one of the funds of a Dutch independent investment manager, which is focused on responsible investments in developing countries. Hierarchical multiple regression analyses were conducted to examine the association between governance mechanisms and the respective dependent variables. Findings – The results show that boards of a MFI with insiders (for example, employees) are a significant predictor of sustainability. Regulation impacts sustainability significantly in a negative way. Overall, the study shows that only a limited number of variables influence the sustainability and outreach of an MFI. Research limitations/implications – The limitation of the studied investment fund is that it invests in expanding and mature MFI’s. So the results of this research can only be generalized to expanding and mature MFI’s. Practical implications – The governance mechanisms that are recommended in the industry guidelines and which are studied here are often not relevant in respect to sustainability and outreach of MFIs. The approach to microfinance governance should be broadened by focusing more on stakeholders and the decision making process in an MFI. Social implications – Good governance is key for the microfinance institutions and even more complicated than for regular companies that do not have a double bottom line (sustainability and outreach). to be successful in the future, and for clients to reach the best end result, it is essential that the governance mechanisms that influence the bottom line are determined. Originality/value – Not much research has been done with respect to the governance mechanisms, which have impact on the sustainability and outreach of MFIs.
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Gutiérrez-Nieto, Begoña, Carlos Serrano-Cinca, and Cecilio Mar Molinero. "Microfinance institutions and efficiency." Omega 35, no. 2 (April 2007): 131–42. http://dx.doi.org/10.1016/j.omega.2005.04.001.
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Tadele, Haileslasie, Helen Roberts, and Rosalind H. Whiting. "Microfinance institutions' website accessibility." Pacific-Basin Finance Journal 50 (September 2018): 279–93. http://dx.doi.org/10.1016/j.pacfin.2016.10.003.
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Musanganya, Isabelle, Chantal Nyinawumuntu, and Pauline Nyirahagenimana. "THE IMPACT OF MICROFINANCE BANKS IN RURAL AREAS OF SUB-SAHARAN AFRICA." International Journal of Research -GRANTHAALAYAH 5, no. 9 (September 30, 2017): 80–90. http://dx.doi.org/10.29121/granthaalayah.v5.i9.2017.2201.
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Many researchers consider microfinance as a tool for poverty reduction. Even more, especially in post-conflict African countries, micro-financial institutions are seen as an opportunity of reconciliation. Lending from microfinance institutions to that from traditional banks and examine their respective effects upon economic growth has been practiced in some sub-Saharan countries. Considerable progress in research has been found that microfinance loans raise growth comparatively to that of traditional banks. A lot of number of researches carried out in sub-Saharan countries even in other developing countries outside of Africa did not find strong evidence that bank loans raise growth. There is, however, some evidence that bank loans do increase investment, whereas microfinance loans do not appear to do so. Differently, other researchers highlighted clearly that microfinance can provide its contribution on poverty reduction and better access to finance needed for startup micro-entrepreneurs along the world. These results suggest that microfinance loans are not primarily invested as physical capital in developing countries, but could still augment total factor productivity, whereas banks may have been financing non-productive investments. Herein, we highlighted the impact of microfinance banks on developing countries economic growth. We also indicate how microfinances system incorporated in rural areas boosted the lifestyle of poor people in Sub-Saharan Africa.
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Pluskota, Przemysław. "Microfinance and microfinance institutions – development directions and prospects." European Journal of Service Management 27 (2018): 223–32. http://dx.doi.org/10.18276/ejsm.2018.27/1-28.
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Tchakoute Tchuigoua, Hubert. "Institutional framework and capital structure of microfinance institutions." Journal of Business Research 67, no. 10 (October 2014): 2185–97. http://dx.doi.org/10.1016/j.jbusres.2014.01.008.
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Babajide, Abiola Ayopo, Joseph Niyan Taiwo, and Kehinde Adekunle Adetiloye. "A comparative analysis of the practice and performance of microfinance institutions in Nigeria." International Journal of Social Economics 44, no. 11 (November 6, 2017): 1522–38. http://dx.doi.org/10.1108/ijse-01-2016-0007.
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Purpose The successful story of microfinance institutions is often tied to the practice and methods of credit delivery as evidence among international world class microfinance institutions across the globe. The purpose of this paper is to examine the impact of practice and methods of credit delivery employed by “non- profit” and “for-profit” microfinance institutions on financial sustainability and outreach programmes of the microfinance institutions in Nigeria. Design/methodology/approach The study adopts the survey research design and multi-stage stratified random sampling procedure to collect data from 372 senior management staff, managing directors and board members of microfinance institutions of both groups in Nigeria. Data collected were analyzed using descriptive statistics and multiple regressions analysis. Findings The findings suggest that the current practice and methods of credit delivery of microfinance in both “non-profit” and “for-profit” microfinance institutions have an inverse relationship with the financial sustainability and outreach programmes of the institutions. This study provides empirical evidence for the incessant failure of microfinance institutions in Nigeria. Research limitations/implications The study therefore recommends an immediate overhaul of the methodology and practice of microfinance institutions in the country to align with international best practice. Originality/value In spite of the huge literature on microfinance in Nigeria, there is not enough evidence to empirically prove that the practice of microfinance has affected the performance of the industry in Nigeria. This study sets out to fill that gap in the literature. The paper examines the practice of microfinancing in Nigeria vis-à-vis the performance of the microfinance institutions, categorized into NGO and microfinance bank “for-profit” institutions using international best practices from countries where microfinance is highly successful as a benchmark for deployment of microfinance in Nigeria, in order to proffer policy direction to stakeholders on steps to take to ensure viability in the microfinance subsector in Nigeria.
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Risal, Nischal. "Microfinance Position and Indebtedness: Empirical Evidence from Microfinance Institutions in Nepa." Pravaha 24, no. 1 (June 12, 2018): 120–36. http://dx.doi.org/10.3126/pravaha.v24i1.20232.
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The paper has been built up with the aim of analyzing the microfinance institutions status and indebtedness in Nepal. Initially, the paper starts with the thematic review based on etymological, ontological, epistemological dimensions then the status of microfinance institutions and indebtedness in Nepal have been presented in the second part. The descriptive analytical research design has been adopted to analyze and interpret the population data. The fifty three microfinance institutions' data have been reviewed, tabulated and analyzed using MSExcel. The microfinance institutions have been found efficient in saving and credit services. The microfinance credit service has not been utilized as per the need of the people and capacity of the institutions. The loan recovery, interest recovery, clients awareness/activeness have been found effective. Overall, microfinance institutions status has been found sound. Only few institutions are below the satisfaction level. The microfinance services in terms of micro loan are not uniform among microfinance institutions. The indebtedness challenge have found at bottom level in the microfinance industry. It is recommended to all the microfinance institutions to come up with policies, strategies and regulatory framework to benchmark the level of tolerance to indebtedness, so that the microfinance institutions may sustain by achieving the objectives of poverty alleviation through microfinance services. Pravaha Vol. 24, No. 1, 2018, Page: 120-136
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Mutamuliza, Eularie, K. Vishwanatha, and SR Mbaraka. "Determinants of smallholder farmers’ participation in microfinance markets in Huye district, southern province, Rwanda." African Journal of Food, Agriculture, Nutrition and Development 21, no. 07 (September 2, 2021): 18319–29. http://dx.doi.org/10.18697/ajfand.102.19445.
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Microfinance markets play a significant role in enhancing socio-economic development of developing countries. In Rwanda, access to microfinance in financing agriculture is very important for future development. Despite this development, smallholder farmers still have limited access to institutional financial services. This study assessed factors that affect smallholder farmers’ participation in microfinance markets in three sectors of Maraba, Mukura and Ngoma in Huye district in Southern province of Rwanda. Primary data were collected using questionnaires and personal interviews. A total of 300 respondents were selected using a simple random sampling technique from participants and non-participants in microfinance markets. Data collected were analyzed through descriptive statistics and Probit regression model. Results from descriptive statistics revealed that major sources of income were farming and business activities. Findings revealed also that each household had an average of about five members with standard deviation of 1.901 and mean value of household land size of 1.87 ha with standards deviation of 0.758. Findings from Probit analysis revealed that household size, education, total annual income, cooperative membership, and household savings had a positive and significant effect on smallholder farmers’ participation in microfinance markets. Distance from microfinance institutions negatively influenced participation in microfinance markets. Households that were located far from to the microfinance institutions were less likely to participate in microfinance markets compared to those nearer to the institutions. This study recommends microfinance institutions in Rwanda to expand their financial systems to enable smallholder farmers access affordable agricultural finance. Further, there is need for microfinance institutions to create more awareness programs to help smallholder farmers get key information related to microfinance services. This is expected to influence smallholder farmers’ willingness to apply for microcredits for agricultural development. This will in the long-run help the smallholder farmers to adopt new practices and technologies thus increasing their agricultural production.
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Bennouna, Ghita, and Mohamed Tkiouat. "Stochastic model of microcredit interest rate in Morocco." Risk Governance and Control: Financial Markets and Institutions 6, no. 4 (2016): 268–73. http://dx.doi.org/10.22495/rgcv6i4c2art3.
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Access to microcredit can have a beneficial effect on the well-being of low-income households excluded from the traditional banking system. It allows this population to receive affordable financial services to help them to meet their needs and to improve their living conditions. However to provide access to credit, microfinance institutions should ensure not only their social mission but also commercial and financial mission to enable the institution to perpetuate and become self-sufficient. To this end, MFIs (microfinance institutions) must apply an interest rate that covers their costs and risk, while generating profits, Also microentrepreneurs need, to this end, to ensure the profitability of their activities. This paper presents the microfinance sector in Morocco. It focuses then on the interest rate applied by the Moroccan microfinance institutions; it provides also a comparative study between Morocco and other comparable countries in terms of interest rates charged to borrowers. Finally, this article presents a stochastic model of the interest rate in microcredit built in random loan repayment periods and on a real example of the program of loans of microfinance institution in Morocco.
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Amin, Muhammad. "IMPLEMENTASI UNDANG-UNDANG NOMOR 1 TAHUN 2013 TERHADAP LEMBAGA KEUANGAN MIKRO SYARIAH YANG BERBADAN HUKUM KOPERASI." JURISDICTIE 10, no. 1 (July 11, 2019): 78. http://dx.doi.org/10.18860/j.v10i1.6482.
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<p><em>The existence of 2013 No. 1 Law concerning microfinance institution has force sharia microfinance institution whether it is cooperatively incorporated institutions or limited liability companies to adjust their institutional form, operational system, business fields, capital and every aspect related to the rules included in that law as the consequences. However, </em><em>the consequences of compulsory sharia microfinance institutions to obtain business licenses at financial service authorities have not run optimally. </em><em>The fact says there are only 17 sharia microfinance institution that have registered their institution with financial service authority</em><em>. The writer</em><em> was</em><em> interested in digging deeper into the compliance Anggrek Cooperative</em><em> which is a sharia microfinance institution</em><em> in implementing Law Number 1 of 2013 concerning Microfinance Institutions and the resulting impact on compliance</em><em> to it</em><em>.</em></p><p><em>Kesimpulannya bahwa kepatuhan hukum membuat Koperasi LKMS Anggrek mendaftar pada OJK dengan perubahan anggaran dasar yang bertujuan merubah dan menambah poin terkait kelembagaan, kegiatan usaha, cakupannya, serta pembinaan dan pengawasan. Sedangkan BTM Surya tidak demikian, melainkan memilih PERMEN No 16 /PER/M.KUKM/IX/2015 untuk memayungi operasionalnya, sesuai dengan arahan dinas koperasi. Hal ini dikarenakan, adanya polemik terkait UU LKM dengan UU Perkoperasian beserta aturan turunan. Kepatuhan Koperasi LKMS Anggrek tidak lepas dari komitmen normatif melalui legitimasi Ketika diukur dalam tingkat kepatuhan, maka kepatuhan Koperasi LKMS Anggrek sampai pada tahap identification, dan upaya mewujudkan program“Service City” (hifz an-nafs) dan mengandung maksud perkembangan ekonomi, (hifz al-mal). Sedangkan kesadaran hukum BTM Surya terhadap UU LKM, tidak serta merta membuatnya patuh, Namun langkah pengurus dalam mengelola harta merupakan upaya (hifz al-mal). Dan hubungan baik dengan dinas koperasi selaku lembaga pengawas merupakan interprestasi dari upaya (hifz an-nafs)</em></p><strong><em>Key Words:</em></strong><em>Microfinance Institution, Implementation, Cooperatively Incorporated Sharia Microfinance Institution</em>
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Kupina, Qefsere. "Development of Microfinance Institutions (MFIs) in Kosovo." European Journal of Social Sciences Education and Research 3, no. 1 (April 30, 2015): 89. http://dx.doi.org/10.26417/ejser.v3i1.p89-86.
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Well functioning microfinance sector can contribute to the creation of the sustainable financial institutions of the country. An improvement in the microfinance institutions (MFIs) seems to have a positive impact in the lives of the people that able to work but is limited to banking service. The role and importance of the microfinance institutions have increased during the last decade. Large numbers of microfinance programs increased significantly in conflict affected environments, and in many cases become successful institutions. Kosovo is a good example, which indicates the role of MFIs in countries emerging from conflict. By the end of the war in Kosovo (1999) brought the emerging necessary needs for capital projects dealing with reconstruction for economic, social and political development. Therefore, financial support from large numbers of international and relief organizations was imperative for the overall situation in Kosovo. Expansion of the microfinance institutions' networks and improvement of their activities are important for the Kosovo financial system. Microfinance sector in Kosovo is well specified and regulated within their constitutional acts. The microfinance institutions’ goal as a development organization is to serve the financial needs of un-served and underserved markets as a means of meeting development objectives. Researching the current situation of MFIs in Kosovo, the aim of this paper is to describe the overall microfinance sector improvement to its establishment, thereby to provide some additional assessment for the studies in the future. It was stated that microfinance in Kosovo has found an adequate environment for development as well network expansion.
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Kauser, Zeenat, and Dr M. N. Zubairi. "Role of Indian Microfinance Institutions in Financial Inclusions." International Journal for Research in Applied Science and Engineering Technology 10, no. 5 (May 31, 2022): 4385–89. http://dx.doi.org/10.22214/ijraset.2022.43364.
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Abstract: Microfinance growth is critical to the upliftment of financially excluded from the mainstream. This is evident from their contribution to improving financial inclusion particularly in semi urban and rural locations. Micro Finance players have been actively pursuing activities to balance social and commercial obligations and a key stakeholder in the process customers Financial Institutions and regulators. This paper highlights various aspects of growth of microfinance institution with a wide array of services in India that have consequently brought about significant changes in the lives of economically marginalized people and reduce vagaries of source of income. Keywords- Financial inclusions, microfinance institutions, outreach.
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Hope Quao, Kwami, Lawrence M. Lekhanya, and Nirmala Dorasamy. "An investigation of the financial monitoring policies for microfinance institutions in Ghana." Investment Management and Financial Innovations 14, no. 4 (December 20, 2017): 90–104. http://dx.doi.org/10.21511/imfi.14(4).2017.09.
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The need to regulate microfinance institutions (MFIs) was advocated and researched yet lacks purposeful in-depth exploring studies of the formulation process of financial monitoring policies, their implementation and accompanying challenges. Consequently, this study contributes by reviewing the specific financial policies for microfinance in Ghana and assesses factors mitigating effective implementation of such policies. It also introduces implementation theory into the MF research arena, thus shifting MF research focus. The study revealed that policies formulated for MFIs in Ghana and elsewhere are skewed and policy implementation, monitoring and supervision found to be less effective. The results further identified inadequate support structures and large unlicensed profit-oriented informal microfinance operations in Ghana as major obstacles to efficient implementation of microfinance policies. This paper therefore recommends the creation of a semi-autonomous institution, the National Microfinance Oversight Authority, to license, regulate and supervise the informal microfinance institutions in Ghana.
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Mas’ud, Riduan. "Digital Marketing Communication Patterns for Islamic Microfinance Institutions in the Industrial Era 4.0." Khazanah Sosial 3, no. 3 (July 30, 2021): 160–76. http://dx.doi.org/10.15575/ks.v3i3.19656.
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This study tries to show that implementing a comprehensive marketing program will help Islamic microfinance institutions (LKMS) improve their overall performance, especially in the current industrial era. Like other Islamic organizations, Islamic microfinance institutions must follow Islamic (Sharia) rules in all aspects of a business. Then a marketing program suitable for Islamic microfinance institutions must include a marketing concept established by relying on Islamic values. Similar to other organizations, the main objective of the marketing program of Islamic microfinance institutions is to retain existing customers and attract new customers. In addition, an efficient marketing program must contain several specifications emphasizing the nature of the market and the institution itself, competitors, development of marketing plans, and client preferences. Some concrete steps that need to be taken by LKMS are using Internet of Things (IoT) technology, cloud computing, big data and customer profiling, and electronic payments
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Iyengar, Kishen Parthasarathy, Najam Ahmad Quadri, and Vikas Kumar Singh. "Information Technology and Microfinance Institutions." Journal of Electronic Commerce in Organizations 8, no. 2 (April 2010): 1–11. http://dx.doi.org/10.4018/jeco.2010040101.
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Microfinance Institutions have the potential to alleviate poverty across the world. However, they face many challenges before they can grow to meet set objectives. The use of information technology holds promise to enable such growth. There are some key challenges that must be addressed by microfinance institutions before the full potential of IT can be realized. This paper articulates five key challenges that microfinance institutions face, particularly those operating in rural undeveloped areas in the developing world. This paper also discusses how some of these challenges are being overcome by these institutions. Finally, the authors lay out a framework for building and operating effective information systems.
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Amran, Afifa Malina, Intan Salwani Mohamed, Sharifah Norzehan Syed Yusuf, and Nabilah Rozzani. "Financial and Social Performances of Islamic Microfinance Service Provider With Mobile Banking." International Journal of Financial Research 10, no. 5 (June 10, 2019): 181. http://dx.doi.org/10.5430/ijfr.v10n5p181.
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In Malaysia, Islamic microfinance institutions (IMFIs) are part of Islamic financial institutions and have been established to provide Islamic microfinance products (interest free loans). Their aim is to promote trade activities among Islamic microfinance recipients in improving their standard of living. Information and data gathered can be used as evidence to prove that Islamic microfinance has traits that provide a support system for the poorest of the poor. This study hence intends to investigate the application of technology by Islamic microfinance institutions within a context of its accounting information system through the usage of mobile banking. This study is conducted using qualitative approaches via interviews to obtain in depth understanding of mobile banking usage at an Islamic microfinance institution. Financial data, as well as data on the total number of loan recipients (sahabats) is referred by the study in investigating another aspect of social performance in terms of vicegerency and accountability of the IMFI. Extensive application of vicegerency concept in explaining the findings is parallel to Shari'ah Foundation for Accountants in outlining characteristics of Muslim accountants in preventing them from doing prohibited actions.
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Noer, Zakiah. "AKIBAT HUKUM PENDIRIAN LEMBAGA KEUANGAN MIKRO OLEH BADAN HUKUM KOPERASI." JURNAL MEDIA HUKUM DAN PERADILAN 4, no. 1 (May 30, 2018): 35–50. http://dx.doi.org/10.29062/jmhp.v4i1.3.
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This research is underlined by the existence of cooperative business activities which collect and distribute funds over its members, and also to its non-members. In order to avoid the violation of the provisions in Act No. 25 Year 1992 about Cooperatives, cooperative has established a microfinance institution (MFI) which called as Cooperative MFI. The establishment of microfinance institutions causes the legal consequences on several aspects because of the different regulations between Cooperative and MFI according Act No. 25 Year 1992 about Cooperatives and Act No.1 Year 2013 about Microfinance Institutions
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Bi, Zohra, and Shyam Lal Dev Pandey. "COMPARISON OF PERFORMANCE OF MICROFINANCE INSTITUTIONS WITH COMMERCIAL BANKS IN INDIA." Australian Journal of Business and Management Research 01, no. 06 (January 8, 2012): 110–20. http://dx.doi.org/10.52283/nswrca.ajbmr.20110106a12.
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Microfinance in India has been viewed as a development tool which would alleviate poverty and enhance growth of the country through financial inclusion. Out of 6 lakh villages in India, only approximately 50000 have access to finance. India is a country which has the highest number of households which are excluded from banking. With the Andhra crisis of microfinance institutions and issues that microfinance institutions have a mission drift, the aim of the paper is to study the performance and efficiency of microfinance. A sample of microfinance institutions in India have been selected based on their ratings given by microfinance information exchange (MIX) for the study. The performance of these sample MFIs as well as their performance with respect to commercial banks in India have been studied using statistically tools. A microfinance institution is measured for financial sustainability based on its good financial accounts and the recognized accounting practices they follow according to Meyer (2002). Data for the microfinance institutions have been collected from Microfinance information exchange (MIX) where few of the MFIs have started reported their financial data. The MIX has classified the MFIs based on various parameters such as level of disclosure, financial parameters etc and rated them accordingly. Out of the 88 MFIs in India reported on MIX, 24 MFIs are taken as samples, these samples taken were five star rated by MIX. The financial parameters of these MFIs are studied and compared with the financial parameters of commercial banks and their financial performance can be analyzed. The various parameters taken for analyzing the financial performance of MFIs and banks include: Financial structure, Profitability and Efficiency.
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Danstun, Ngonyani, and Mapesa Harun. "The Effect of Credit Collection Policy on Portfolio at Risk of Microfinance Institutions in Tanzania." Studies in Business and Economics 14, no. 3 (December 1, 2019): 131–44. http://dx.doi.org/10.2478/sbe-2019-0049.
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AbstractThis paper presents the results of the study on the effect of credit collection policy on portfolio at risk of microfinance institutions in Tanzania. The study used cross-sectional survey data of microfinance institutions in three regions of Dar es salaam, Morogoro and Dodoma. Random sampling was employed to obtain a sample of 219 respondents in all three regions. Multiple linear regression analysis was used to determine the effect of credit collection policy on portfolio at risk of microfinance institutions. Results show that, there is a positive relationship between interest rates charged and portfolio at risk of microfinance institutions. On the other hand, the variable for grace period on loans and loan sizes to borrowers had a negative relationship with portfolio at risk of microfinance institutions. The study recommends that, microfinance institutions in Tanzania need to reconsider the interest rates charged to their clients to enhance sustainability of their loan portfolios. Moreover, microfinance institutions need to enhance provision of grace period to their customers. Also, establish efficient loan product sizes which suffice diverse client’s needs. That would encourage and broaden client repayments, contribute to financial performance and reduced risk of portfolio of microfinance institutions.
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Mohammad, Khalil Ullah, and Noor Ul Haya Adnan. "The Impact of Indirect Competition on Bank Net Interest Margins: Microfinance Evidence from Pakistan." iRASD Journal of Economics 4, no. 1 (March 20, 2022): 55–68. http://dx.doi.org/10.52131/joe.2022.0401.0060.
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The study aims to investigate the impact of growth in microfinance initiatives on the net interest margins of commercial banks in Pakistan. Using data from the world bank MIX database and Thomson Reuters, we conducted a GLS random effect estimation on an unbalanced panel of Pakistani banks from 2010 to 2018. We find that credit quality, solvency, bank size, earning asset diversification, and market concentration impact banks' net interest margins. In addition, we find growth in development finance institutions to significantly affects commercial bank margins. Microfinance institutional growth is found to reduce net interest margins. Besides microfinance institutions, the growth of specialised microfinance banks is also found to impact the spread negatively. This indirect effect may be evidence of the improved efficiency derived from higher competition or the fact that microfinance institutions may be using conventional banks as a permanent source of funds to become financially sustainable. The role of microfinance growth is not considered in literature since microfinance institutions are very different from conventional banks regarding lending volume and size. This study contributes to the existing theoretical and empirical literature on net interest margins by showing a positive role of indirect competition on banks' net interest margins. Therefore, policymaking focusing on improving conditions that enhance competition to bring bank spreads closer to regional levels may be needed.
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Agbemava, Edinam, Israel Kofi Nyarko, Thomas Clarkson Adade, and Albert K. Bediako. "Logistic Regression Analysis Of Predictors Of Loan Defaults By Customers Of Non-Traditional Banks In Ghana." European Scientific Journal, ESJ 12, no. 1 (January 29, 2016): 175. http://dx.doi.org/10.19044/esj.2016.v12n1p175.
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The objective of this research is to identify the risk factors that influence loan defaults by customers in the microfinance sector and to develop a model that links these factors to credit default by customers in the sector. Data from a microfinance institution based in Accra Ghana was used. A binomial logistic regression analysis was fitted to a data of 548 customers who were granted credit from January 2013 to December 2014. The results of the study revealed that six factors: X3 (Marital Status); X7 (Dependents); X11 (Type of Collateral or Security); X13(Assessment); X15 (Duration); and X16 (Loan Type) were statistically significant in the prediction of loan default payment with a predicted default rate of 86.67%. It is therefore suggested that microfinance institutions adopt among others, the default risk model to ascertain the level of risk since it’s relatively efficient and cost effective. There should also be up to date training for loan officers of microfinance institutions in order to improve on their assessment skills and methodology. The supervising body of microfinance institutions (Bank of Ghana) should also consider enacting laws that will ensure that all such institutions in Ghana are roped into centralized database to check multiple borrowing and also serve as an internal control measure for the sustainability of these institutions.
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Baskaran, Angathevar, Thiri Dong, and Sonia Kumari Selvarajan. "Microfinance and Women’s Empowerment in Myanmar." Jurnal Institutions and Economies 14, no. 2 (April 1, 2022): 59–90. http://dx.doi.org/10.22452/ijie.vol14no2.3.
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Like in many other developing countries, microfinance programmes in Myanmar have become an avenue to reduce poverty. This research examines whether microfinance in Myanmar has empowered female clients compared to non-microfinance clients, in terms of: (i) general decision-making (children’s education, family planning, children’s marriage, health care); and (ii) financial decision-making (income utilisation, loan usage, savings, investment). Primary data was collected using a questionnaire survey to achieve the research objectives. The sample of the survey consists of two groups of women living in the Ayeyarwady region, Myanmar: (i) Beneficiaries of microfinance programmes, and (ii) non-beneficiaries of any microfinance institutions. Female clients either started a new business or expanded/diversified an existing business using microfinance, which helped to increase income and savings. Overall, 89.8% of microfinance clients have gained significant empowerment (in making general and financial decisions combined). The discriminant analysis based on four indicators - children’s education, children’s marriage, savings, and investment - shows that the decision-making power of microfinance clients has improved compared to non-clients. The government should actively promote a microfinance ecosystem through robust microfinance institutional frameworks including, microfinance institutions, intermediaries, and local government agencies. Financial literacy awareness campaigns should be organised frequently to promote wider women’s participation in microfinance programmes.
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Mersland, Roy. "Market opportunities for microfinance institutions." Enterprise Development and Microfinance 24, no. 4 (December 2013): 282–94. http://dx.doi.org/10.3362/1755-1986.2013.027.
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Gutiérrez‐Nieto, Begoña, Yolanda Fuertes‐Callén, and Carlos Serrano‐Cinca. "Internet reporting in microfinance institutions." Online Information Review 32, no. 3 (June 20, 2008): 415–36. http://dx.doi.org/10.1108/14684520810889709.
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International Monetary Fund. "Microfinance Institutions and Public Policy." IMF Working Papers 02, no. 159 (2002): 1. http://dx.doi.org/10.5089/9781451857689.001.
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M., Muneer Babu, and Praveen Kulshreshtha. "Efficiency of Indian Microfinance Institutions." Indian Economic Journal 60, no. 4 (January 2013): 81–101. http://dx.doi.org/10.1177/0019466220130405.
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Hardy, Daniel, Paul Holden, and Vassili Prokopenko. "Microfinance institutions and public policy." Journal of Policy Reform 6, no. 3 (September 2003): 147–58. http://dx.doi.org/10.1080/1350485032000175637.
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Castillo, Alfonso. "Alternative microfinance institutions and vulnerability." Development in Practice 9, no. 5 (November 1999): 605–10. http://dx.doi.org/10.1080/09614529952747.
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Gutiérrez-Nieto, B., C. Serrano-Cinca, and C. Mar Molinero. "Social efficiency in microfinance institutions." Journal of the Operational Research Society 60, no. 1 (January 2009): 104–19. http://dx.doi.org/10.1057/palgrave.jors.2602527.
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Tchakoute Tchuigoua, Hubert. "Capital Structure of Microfinance Institutions." Journal of Financial Services Research 47, no. 3 (January 14, 2014): 313–40. http://dx.doi.org/10.1007/s10693-013-0190-2.
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Tchakoute Tchuigoua, Hubert. "Buffer capital in microfinance institutions." Journal of Business Research 69, no. 9 (September 2016): 3523–37. http://dx.doi.org/10.1016/j.jbusres.2016.01.034.
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Daher, Lâma, and Erwan Le Saout. "Performance of Listed Microfinance Institutions." Strategic Change 26, no. 2 (March 2017): 145–58. http://dx.doi.org/10.1002/jsc.2117.
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García-Pérez, Icíar, María Jesús Muñoz-Torres, and María Ángeles Fernández-Izquierdo. "Microfinance institutions fostering sustainable development." Sustainable Development 26, no. 6 (March 22, 2018): 606–19. http://dx.doi.org/10.1002/sd.1731.
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Lokira, Linus, and Lucy Wamugo. "Financial Accountability and Sustainability of Microfinance Institutions in West Pokot County, Kenya." International Journal of Current Aspects in Finance, Banking and Accounting 4, no. 2 (June 2, 2022): 47–59. http://dx.doi.org/10.35942/ijcfa.v4i2.255.
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In the recent past, there has been a constant demand for timely accountability reports due to increased awareness, devolution of funds and establishment of various new institutions. Financial sustainability of microfinance institutions in West Pokot County in Kenya has been highlighted as a major concern. The main purpose of the study determined the effects of financial accountability on the sustainability of the microfinance institutions in the West Pokot County. The specific objectives were to: determine the effect of audit efficiency on the sustainability of Micro Finance Institutions (MFIs) in West Pokot County; establish the effect of fraud detection on the sustainability of microfinance institutions in West Pokot County; determine the effect of financial reporting on the sustainability of microfinance institutions in West Pokot County; and determine the effect of financial regulation on the sustainability of microfinance institutions in West Pokot County. The study was based on Agency theory, stakeholder theory, and stewardship theory. The study applied explanatory research design. The target population was the 6 MFIs in West Pokot County. A census was taken since the population is small. The researcher used a semi-structured questionnaire administered to each member of the respondents to collect the data. The collected data was analyzed using descriptive statistics and regression and correlation analysis by the help of SPSS. The results were presented in tables, pie charts and bar charts. From the findings, when financial accountability factors are held at zero, sustainability of microfinance institution will be negative (-0.257). At the same time, an increase in audit efficiency, fraud detection, financial reporting, and financial regulations each by one unit leads to an increase in sustainability of microfinance institutions by 0.276, 0.313, 0.453, and 0.036 units respectively the p-values were also less than 0.05 (that is 0.025 for audit efficiency, fraud detection (0.002), financial reporting (0.005) and financial regulations (0.038). This implies that all financial accountability factors considered in this study have a positive relationship with sustainability. The study concludes that financial accountability is to a great extent observed in MFIs particularly through audit efficiency, fraud detection, financial reporting, and financial regulations. The study recommends that the government through the relevant agents should ensure existing financial accountability regulatory framework is adhered to ensure sustainability of microfinance institutions. Microfinance institutions also should ensure they pay focus on audit efficiency, fraud detection, financial reporting, and financial regulations.
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Tampubolon, Dahlan, Mardiana Mardiana, and Iriana Safitri Zen. "Determinants of Farmer’s Financing Participation in Sharia Microfinance Institutions." IKONOMIKA 6, no. 1 (August 3, 2021): 73–96. http://dx.doi.org/10.24042/febi.v6i1.9187.
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This study aims to analyze the determinants of farmer participation in sharia microfinance institutions. The study area covers Siak Regency and Bengkalis Regency, Riau Province. Respondents were taken as many as 30 respondents in Siak and 32 respondents in Bengkalis. The probit regression model is used to explain the factors that influence farmer participation in sharia microfinance institutions. Farmer loans are used for working capital, buying seeds and daily necessities. Most of the financing is wakalah wal mudhárabah and very few borrows in the form of wakalah wal musháraka. The results showed that the factors that influence farmer participation are education, dependency ratio, value of liquid assets owned, and farmers' income. The farther the farmer's house is from the location of the shariah microfinance institution, the less opportunity to participate. Other independent variables included in the model have no significant effect on farmers' opportunities to participate in sharia microfinance institutions in the two districts.
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EPSTEIN, MARC J., and KRISTI YUTHAS. "THE CRITICAL ROLE OF TRUST IN MICROFINANCE SUCCESS: IDENTIFYING PROBLEMS AND SOLUTIONS." Journal of Developmental Entrepreneurship 16, no. 04 (December 2011): 477–97. http://dx.doi.org/10.1142/s1084946711001951.
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Trust is the basis of many aspects of microfinance operations and is a critical determinant of microfinance success. Trust governs interactions within borrowing groups, between clients and loan officers and between clients and institutions. To effectively address the many strategic challenges microfinance institutions (MFIs) face, they must design control systems that address low levels of interpersonal and institutional trust in their target populations. By increasing focus on trust, MFIs can significantly improve their financial sustainability and social impact. This paper examines trust and its important role in both existing challenges and effective solutions in the microfinance industry. Informed by prior literature and field experience, a model is developed that can provide an effective foundation for scholars and MFI leaders to better understand and manage for improved microfinance success.