What is sustainability in microfinance?

What is sustainability in microfinance? Microfinance Institutions (MFIs) work to increase social sustainability by providing more services to particular clientele, while maintaining the financial and operational sustainability of the institutions. What is financial sustainability? Financial

What is sustainability in microfinance?

Microfinance Institutions (MFIs) work to increase social sustainability by providing more services to particular clientele, while maintaining the financial and operational sustainability of the institutions.

What is financial sustainability?

Financial sustainability refers to the ability to maintain. financial capacity over time (Bowman, 2011). Regardless of an organization’s for-profit or. nonprofit status, the challenges of establishing financial capacity and financial sustainability are. central to organizational function (Bowman, 2011).

What drives microfinance institution’s financial sustainability?

First, we show that a high quality credit portfolio, coupled with the application of sufficiently high interest rates that allow a reasonable profit and sound management are instrumental to the financial sustainability of MFIs.

What does it mean for microfinance institution MFI to be financially sustainable?

… Financial sustainability of MFIs is usually catered through loans to the financially disadvantaged people with a view to generate sufficient income to overcome all the requisite expenses of livelihood and furthermore to generate reasonably higher income than expenses to augment growth for their future (Ayayi & Sene …

What are the key principle of microfinance?

The key things that a government can do for microfinance are to maintain macroeconomic stability, avoid interest-rate caps, and refrain from distorting the market with unsustainable subsidized, high-delinquency loan programs.

What are the characteristics of microfinance?

Key Features of Microfinance

  • The borrowers are generally from low income backgrounds.
  • Loans availed under microfinance are usually of small amount, i.e., micro loans.
  • The loan tenure is short.
  • Microfinance loans do not require any collateral.
  • These loans are usually repaid at higher frequencies.

What is financial self-sufficiency in microfinance?

Financial self-sufficiency is the ratio that is used for the evaluation of the company’s ability to generate revenue to cover its total costs while maintaining its equity value and other concession funds relative to the inflation and other cost of capital.

What is operational self-sufficiency in microfinance?

Operational self-sufficiency (OSS) is the ratio that is usually used in the Microfinance Institution (MFI) to analyze its ability in generating operating revenues or incomes in order to cover the total cost incurred in running the business. The MFI would be doing fine if the ratio is bigger than 100%.

What is the definition of microfinance in finance?

Microfinance is the provision of financial services to low-income clients, including consumers and the self-employed, who traditionally lack access to banking and related services. Refers to institutions that specialize in making very small loans to very poor persons in developing countries.

Who are the people who need microfinance services?

Microfinance services are provided to unemployed or low-income individuals because most of those trapped in poverty, or who have limited financial resources, do not have enough income to do business with traditional financial institutions.

Who are the largest microfinance companies in the world?

In addition to Compartamos Banco, many major financial institutions and other large corporations have launched for-profit microfinance departments, including CitiGroup, Barclays, and General Electric, for example. Other companies have created mutual funds that invest primarily in microfinance firms.

What is the history of microfinance in Ireland?

History of Microfinance. Microfinance is not a new concept. Small operations have existed since the 18th century. The first occurrence of microlending is attributed to the Irish Loan Fund system, introduced by Jonathan Swift, which sought to improve conditions for impoverished Irish citizens.