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The Impact of For-Profit MFIs during the Global Recession - Term Paper Example

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This paper describes in what industry will alleviate poverty and increase economic growth in terms of producing more income and creating employment not just in developing countries but also in the world major economies and also how to tackle the impact of microfinance upon some for-profit organizations…
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The Impact of For-Profit MFIs during the Global Recession
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Download file to see previous pages             One of MFIs for-profit entities is the microfinancing banking whose objective is “to increase access to credit among local entrepreneurs who do not have the collateral to obtain loans in commercial banks” (Ayodele & Sotola, 2010). Unlike the traditional banking sector, microfinancing banking services are poverty-focused that allowed poor people to experience the service of mainstream financial services providers. According to the book of Muhammed Yunus, “Banker to the Poor,” he proved that the poor people are creditworthy and that they always payback on what they have obtained, making MFIs more confident (as cited in Ayodele & Sotola, 2010). Although this rationale is not a hundred percent assurance to be sustainable in this kind of business, a good customer relation must be present at all times (“Microfinance Focus,” 2010).
           It was frequently said that poor people stay poor, and one of the reasons was the insufficiency of finance penetration on the lives of the poor. The microfinance concept was formulated by Muhammed Yunus which was being utilized until today. This concept was developed to correct the failure of the idea that financial services were not for the poor. This short literature review will introduce the role of microfinance on how it influenced the lives of the poor, especially during the recession. Since then, microfinance organized its purpose into various categories to appropriately deliver the financial demand of different people. The services generally include capital market such as microwaving and microcredit (Burgess & Pande, 2003); however, it also comprehends on the categories of insurance, money transfers and payment services (Wrenn, 2005, p.1). With the so many decades of financial crises, MFIs were still unharmed and not directly affected compared to other entities. Way back late 1990s, MFIs were untouched from the currency and banking crises in East Asia and Latin America and performed much better than mainstream banks (Littlefield & Kneiding, 2009). ...Download file to see next pagesRead More
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