Understanding what microfinance institutions need to address to aid poverty alleviation, social inclusion and human development

Poverty, in its most basic form can be defined as a deprivation of well-being. It is an issue that has been evident in society for centuries and a concern for government policy makers and more recently for non-government organizations (NGOs). In this paper, we consider how management approaches to resolving the dilemma of poverty can be advanced by drawing on two major areas in the development arena associated with poverty, namely, ‘social exclusion’ and ‘the human development paradigm’. We put forward the argument that for groups of people where social disintegration has already occurred, only structural interventions coupled with a social development mechanism will achieve the desired effect. One method for achieving this is through the use of microfinance programs which provide a broad range of financial services to the poor and low-income households as well as to micro-enterprises. This paper contributes to both management practice and theory by developing a theoretical model that microfinance institutions need to do to aid both ‘human development’ and ‘social inclusion’ processes for the socially excluded and poor.

Reassessing Grameen Bank's micro credit programme for poverty alleviation in bangladesh : a new perspective

Rural finance has been a mltior policy in alleviating poverty in developing countries. Of specific interest are the micro credit programmes that target the poorest segment of the population. Despite some successes in particular settings, the efficacy of micro credit programmes has been a mltior concern in recent years. This paper evaluates the success of the Grameen Bank, the premier micro credit provider in rural areas in Bangladesh in the context of contemporary development philosophies. Only a few studies have evaluated the performance of the Grameen Bank from a poverty alleviation perspective. Many have evaluated the efficiency of the Grameen Bank's micro credit programmes using attributes such as the repayment rate. In this paper, we add a new dimension to the literature by arguing that if poverty alleviation is the ultimate objective, then the bank's micro credit programme should be assessed from the borrowers' perspective. Rural credit should be conceptualised not as just an input to production but as a mechanism for rural transformation. Our analysis reveals that while Grameen Bank is an efficient provider of micro credit in rural Bangladesh, its programmes fall short of achieving poverty alleviation for a multitude of borrowers and reshaping the process is hence a critical imperative.

Good practice in microfinance: the challenges of a poverty focus in an evolving industry

The awarding of the 2006 Nobel Peace prize to Grameen Bank founder Muhammad Yunus has further highlighted how microfinance has come to be regarded as a significant and effective tool in making finance available to the poor. However, much debate still centres on both how microfmance should be delivered and its effectiveness measured. Microfinance funding is not something that should be undertaken lightly, and an awareness of all the cogent issues is essential for any donor looking to undertake effective microfinance programming. This chapter will outline some of the key arguments in the contested debate on effective microfinance programming. It will focus on a discussion of poverty and impact assessments and argues that the effective funding of microfinance is dependent on the ability of an NGO to recognise the many forms which micro finance can take and direct their funding accordingly.

Institutions and policies for growth and poverty reduction: the role of private sector development

This paper goes over some of the recent discussions on the effects on growth and poverty of institutions and policies, especially those that relate to the functioning of the private sector. It examines the empirical relationship between various measures of institutional quality and regulatory policies, and economic growth and poverty. The results suggest that good governance, as measured by a strong commitment to the rule of law, among other things, matters for poverty reduction largely through its effect on economic growth. In terms of business regulations, the paper finds that less restrictive regulations pertaining to starting a business are associated with higher economic growth as well as lower rates of $2-a-day poverty. Political freedom is not associated with either higher growth or lower poverty. Taken together, the evidence here seems to suggest that the delivery of good governance and policies that facilitate the creation of new enterprises are more relevant for growth and poverty reduction than the nature of the political system per se.

Education for the end of poverty : implementing all the millenium development goals

This collection of essays and case studies considers the importance of meeting the education MDG as part of worldwide poverty reduction.