This is a verification of Microfinance. Microfinance is booming but there is not empirical study about its efficiency, there is only a promise. And some Microfinance institutions reject subsidies because government failed the same work as Microfinance.
In the paper, author concludes the effect of Microfinance is limited, and their operations are cost-sensitive because they have to lend small money for large number of people. To improve the cost structure, they have to change management structure or get subsidies. Subsidies are totally beneficial for Microfinance institutions even if it has bad effect. If the cost problem is cleared, they can focus more poor people because they now lend money less poor group of people than they want.
However, “making a real dent in poverty rates will require increasing overall levels of economic growth and employment generation”. Microfinance may be help some part of poverty reduction, but it is only introduction. In future, organizations of Microfinance have to challenge for innovation of new model.
No comments:
Post a Comment