Académique Documents
Professionnel Documents
Culture Documents
Review of the
Household survey of regulatory
90 non bank lender 800 rural framework (credit
entrepreneur union and savings
& loan companies)
Poor performance of rural financial
markets in Mexico
●
Shallow (45% rural entrepreneur
Market ●
received a credit transaction during
1992-94)
Segmented
Noncompetitive
proved
●
●
inefficient
●
inequitable
Main Reasons behind the Poor performance
Past govt.
intervention
Underdevelop
Inappropriate Attenuated characterized
ed
banking property by debt
institutional
technology rights forgiveness
infrastructure
and subsidies
interest rate
75% of the The reasons are:
households had Rural
On demand never requested entrepreneur felt
side: a loan from the rural finance as
formal financial too risky and high
sector transaction cost
World ●
●
Expand the distribution network
Introduce adequate financial
products and technologies
●
Introduction of incentives &
internal controls
●
Improve environmental
propose conditionals
Profitability in Microfinance is possible if
five conditions are met
Good understanding
of the market and Keep fixed
offer simple financial
product cost low
Lend on the basis of Develop
the client character conducive
and reputation incentive schemes
Case:02
Microfinance in Indonesia
Background information:
manageme
Objectives
nt
●
to replace directed ●
free hand in determining its
agricultural credit interest rates and other
operating policies
●
to replace subsidies credit ●
high degree of autonomy
●
to provide full range of ●
full accountability for the
financial services performance.
Role of Donor in Microfinance
●
Local, bilateral & multilateral
Donor ●
government donor
Local & International NGOs
Influence ●
Policy reform
●
Infrastructural development
●
Learning source for microfinance providers
Microfinance
Private Institutions in Microenterprise
development
• Advances:
1. Strong methodology based on experience
2. Trained staff
3.Capacity to reach grassroots association
4. Little or no corruption
5. Responsive and nonbureaucratic approach
6. Motivation to scale-up programs and aim for sufficiency
7.Capacity to associate among many to from a coordinate
effort.
• Disadvantages:
1. Limited institutional capacity for scaling up
programs
2. Low level of technical expertise, especially in
financial and information system
3. Frequent lack of sufficient resources to expand
programs
4. Little interaction or knowledge about
government-activity in formal sector
5. Limited vision that maintains small programs
Financial Sector Policies and Legal
Enforcement