This study examines the efficiency of microfinance borrowers and non-borrowers in Pakistan using data
envelopment analysis and tobit regression. The study finds that microfinance borrowers have significantly
higher efficiency scores than non-borrowers. Key determinants of efficiency identified are average propensity to
consume, which has a negative impact, and education level, which has a positive impact. The study recommends
that microfinance institutions address issues like insufficient loan amounts, high interest rates, and requiring
repayment in installments to improve the efficiency of microfinance.
Institutional credit and the profit efficiency of micro and small scale trade...Alexander Decker
This document summarizes a study on the impact of institutional credit on the profit efficiency of micro and small scale traders in Faisalabad, Pakistan. Data envelopment analysis was used to calculate efficiency scores for 85 traders, with the average technical efficiency being 0.78. Tobit regression then explored factors influencing efficiency. It found that average propensity to consume, interest rate, and number of times credit was taken negatively impacted variable returns to scale technical efficiency. Micro traders were more efficient than small scale traders. Traders using loans for their intended business purposes were more efficient than those using loans for other purposes. The study recommends financial institutions improve screening policies and provide training to traders.
An Impact of Capital Adequacy Ratio on the Profitability of Private Sector Ba...Dr. Amarjeet Singh
Profitability being one of the cardinal principles of bank lending acts as a game changer for the survival and success of private sector banks in India. In order to stay profitable, banks have to capitalise on every penny advanced to yield the expected returns. However, considering the constraints laid down by the Reserve Bank of India, banks have to maintain a minimum capital adequacy ratio, as per the current BASEL III regulations active in India. With the mergers of public sector banks, the challenge has got just tougher for the private sector banks in India. Expansion and Diversification are the key strategies adopted by the key players from the private banking sector, however, with the minimum capital adequacy ratio observed by them, it is necessary to understand its actual impact on the bank’s profitability. This research paper aims to throw light upon the linkage that capital adequacy has with the bank’s profitability. It attempts to establish a relation between the Capital Adequacy Ratio with the Net profits of the bank. For the purpose of this study, data from the past 5 years of the leading private sector banks has been collected, namely, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, AXIS Bank and YES Bank. The collected data has been analysed using Pearson’s Correlation to establish a relation between the CAR Ratio & the bank’s profitability. Hypothesis testing has been further done to study the quantum of proportionate change in the profitability with a change in the CAR Ratio for private sector banks using applicable research tools. The said research tools are applied to achieve the desired results while maintaining the required quantum of accuracy. It also aims to understand the proportionate impact of changes in CAR to the bank’s profitability, which can act as a suggested measure for banks to develop a reliable framework for efficient capital management and increase overall efficiency. The results derived from the data collected and analyzed aim to provide scope for further study on the subject matter.
Identity Management Reform and Fraud Prevention in the Nigerian Banking IndustryDr. Amarjeet Singh
This paper assesses the effect ofidentity management reform, namely the Bank verification number (BVN) policy on fraud prevention in the Nigerian banking industry. Using secondary data obtained from annual reports of Nigerian Deposit Insurance Corporation (NDIC) from 2011 to 2018, the study employed descriptive method to analyze trend in fraud variables before and after introduction of the policy and independent t-test to test the hypotheses in the study. Findings revealed that there was an initial decrease in number of staff involved and total amount involved in fraud in the two years following BVN introduction, but which showed increases thereafter.A similar trend was revealed in various fraud types with internet banking fraud showing significant increases in frequency of cases. The results from the t-tests revealed that theBVN policy had no significant impact on fraud prevention within the period under study. It was recommended that the banking public be educated on the different types of fraud and how to protect their personal details from getting into wrong hands. There is also the need to beef up security by improving on protocols required to carry out bank transactions particularly in the area of internet banking. It was also suggested that all bank account numbers be linked to the National Identity Number (NIN) immediately in line with proposals made by the Federal Government on identity management.
A Cashless Economy Challenges and Opportunitiesijtsrd
Going cashless not only eases one’s life but also helps authenticate and formalize the transactions that are done. This helps to curb corruption and the flow of black money which results in an increase of economic growth. The expenditure incurred in printing and transportation of currency note is reduced. In a nation like India, cashless transactions are not widespread, and this is due to the technology gap and the lack of proper awareness and education. Though these are the matters of concern, the government or the financial institution need to address them to create a strong cashless economy. Dr. Vidhya Rajagopalan "A Cashless Economy: Challenges & Opportunities" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-2 , February 2021, URL: https://www.ijtsrd.com/papers/ijtsrd38611.pdf Paper Url: https://www.ijtsrd.com/management/accounting-and-finance/38611/a-cashless-economy-challenges-and-opportunities/dr-vidhya-rajagopalan
The document discusses a study on analyzing the competitiveness of small and medium enterprises (SMEs) in Probolinggo, East Java, Indonesia. It finds that SMEs' ability to build effective and efficient networks is a key determinant of their flexibility and productivity. Effective networks are characterized by operational efficiency through lower transaction costs, improved access to working capital, and a more innovative business climate. The study suggests network expansion is critical for SME policy development.
An Investigation into the Financial Performance of Micro, Small and Medium En...Dr. Amarjeet Singh
Micro, small and medium enterprises (MSMEs) are an indispensable part of the Indian economy. In terms of Gross Value Added (GVA) and Gross Domestic Product (GDP), MSMEs accounted for about 33% and 31% of India's GVA and GDP, respectively, in the year 2019-20. Unlike large enterprises that are concentrated in the metros, MSMEs are spread across smaller and larger rural as well as urban centres of India. They are also the biggest source of employment, especially in rural India, and contribute to the rural development and industrialisation. MSMEs also act as a great social bridge as smaller enterprises are owned by socially backward classes and women than are larger enterprises. For these reasons and more, the India government has always promoted the growth and development of MSMEs through policy initiatives, technology up gradation, and via other means. Consequently, MSMEs have also grown in multi-folds in the past decades in terms of the number of enterprises in operation and the collective revenue of the sector. Several challenges affect the growth of MSMEs, however. One of these is the limited academic studies into the financial performance of MSMEs, probably due to the unavailability of adequate data. The present research attempts to fill this gap by conducting a financial performance evaluation of 51 sample MSMEs based in the district of Nanded, Maharashtra. The research utilizes Data Envelopment Analysis (DEA) to compare the financial performance of sample MSMEs selectively using the suitable variables identified by Arasu et al. (2021). Findings suggest sharp differences in the financial performance of sample units. Inefficient units are suggested to improve their return on asset, return on capital employed, and net profit margin.
Shifters of participation in micro credit and credit in general in pakistanAlexander Decker
This study examines the factors influencing participation in microcredit programs and credit markets more broadly in Faisalabad, Pakistan. The study uses a binary logit model to analyze data collected from 85 microcredit borrowers and 100 non-borrowers. The results indicate that higher average propensity to consume, larger family size, and higher levels of education are positively associated with participation in credit markets. However, having more earners in the family is negatively related to participation. The study aims to identify determinants of credit access to inform policy recommendations for enhancing small traders' access to financing.
Institutional credit and the profit efficiency of micro and small scale trade...Alexander Decker
This document summarizes a study on the impact of institutional credit on the profit efficiency of micro and small scale traders in Faisalabad, Pakistan. Data envelopment analysis was used to calculate efficiency scores for 85 traders, with the average technical efficiency being 0.78. Tobit regression then explored factors influencing efficiency. It found that average propensity to consume, interest rate, and number of times credit was taken negatively impacted variable returns to scale technical efficiency. Micro traders were more efficient than small scale traders. Traders using loans for their intended business purposes were more efficient than those using loans for other purposes. The study recommends financial institutions improve screening policies and provide training to traders.
An Impact of Capital Adequacy Ratio on the Profitability of Private Sector Ba...Dr. Amarjeet Singh
Profitability being one of the cardinal principles of bank lending acts as a game changer for the survival and success of private sector banks in India. In order to stay profitable, banks have to capitalise on every penny advanced to yield the expected returns. However, considering the constraints laid down by the Reserve Bank of India, banks have to maintain a minimum capital adequacy ratio, as per the current BASEL III regulations active in India. With the mergers of public sector banks, the challenge has got just tougher for the private sector banks in India. Expansion and Diversification are the key strategies adopted by the key players from the private banking sector, however, with the minimum capital adequacy ratio observed by them, it is necessary to understand its actual impact on the bank’s profitability. This research paper aims to throw light upon the linkage that capital adequacy has with the bank’s profitability. It attempts to establish a relation between the Capital Adequacy Ratio with the Net profits of the bank. For the purpose of this study, data from the past 5 years of the leading private sector banks has been collected, namely, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, AXIS Bank and YES Bank. The collected data has been analysed using Pearson’s Correlation to establish a relation between the CAR Ratio & the bank’s profitability. Hypothesis testing has been further done to study the quantum of proportionate change in the profitability with a change in the CAR Ratio for private sector banks using applicable research tools. The said research tools are applied to achieve the desired results while maintaining the required quantum of accuracy. It also aims to understand the proportionate impact of changes in CAR to the bank’s profitability, which can act as a suggested measure for banks to develop a reliable framework for efficient capital management and increase overall efficiency. The results derived from the data collected and analyzed aim to provide scope for further study on the subject matter.
Identity Management Reform and Fraud Prevention in the Nigerian Banking IndustryDr. Amarjeet Singh
This paper assesses the effect ofidentity management reform, namely the Bank verification number (BVN) policy on fraud prevention in the Nigerian banking industry. Using secondary data obtained from annual reports of Nigerian Deposit Insurance Corporation (NDIC) from 2011 to 2018, the study employed descriptive method to analyze trend in fraud variables before and after introduction of the policy and independent t-test to test the hypotheses in the study. Findings revealed that there was an initial decrease in number of staff involved and total amount involved in fraud in the two years following BVN introduction, but which showed increases thereafter.A similar trend was revealed in various fraud types with internet banking fraud showing significant increases in frequency of cases. The results from the t-tests revealed that theBVN policy had no significant impact on fraud prevention within the period under study. It was recommended that the banking public be educated on the different types of fraud and how to protect their personal details from getting into wrong hands. There is also the need to beef up security by improving on protocols required to carry out bank transactions particularly in the area of internet banking. It was also suggested that all bank account numbers be linked to the National Identity Number (NIN) immediately in line with proposals made by the Federal Government on identity management.
A Cashless Economy Challenges and Opportunitiesijtsrd
Going cashless not only eases one’s life but also helps authenticate and formalize the transactions that are done. This helps to curb corruption and the flow of black money which results in an increase of economic growth. The expenditure incurred in printing and transportation of currency note is reduced. In a nation like India, cashless transactions are not widespread, and this is due to the technology gap and the lack of proper awareness and education. Though these are the matters of concern, the government or the financial institution need to address them to create a strong cashless economy. Dr. Vidhya Rajagopalan "A Cashless Economy: Challenges & Opportunities" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-2 , February 2021, URL: https://www.ijtsrd.com/papers/ijtsrd38611.pdf Paper Url: https://www.ijtsrd.com/management/accounting-and-finance/38611/a-cashless-economy-challenges-and-opportunities/dr-vidhya-rajagopalan
The document discusses a study on analyzing the competitiveness of small and medium enterprises (SMEs) in Probolinggo, East Java, Indonesia. It finds that SMEs' ability to build effective and efficient networks is a key determinant of their flexibility and productivity. Effective networks are characterized by operational efficiency through lower transaction costs, improved access to working capital, and a more innovative business climate. The study suggests network expansion is critical for SME policy development.
An Investigation into the Financial Performance of Micro, Small and Medium En...Dr. Amarjeet Singh
Micro, small and medium enterprises (MSMEs) are an indispensable part of the Indian economy. In terms of Gross Value Added (GVA) and Gross Domestic Product (GDP), MSMEs accounted for about 33% and 31% of India's GVA and GDP, respectively, in the year 2019-20. Unlike large enterprises that are concentrated in the metros, MSMEs are spread across smaller and larger rural as well as urban centres of India. They are also the biggest source of employment, especially in rural India, and contribute to the rural development and industrialisation. MSMEs also act as a great social bridge as smaller enterprises are owned by socially backward classes and women than are larger enterprises. For these reasons and more, the India government has always promoted the growth and development of MSMEs through policy initiatives, technology up gradation, and via other means. Consequently, MSMEs have also grown in multi-folds in the past decades in terms of the number of enterprises in operation and the collective revenue of the sector. Several challenges affect the growth of MSMEs, however. One of these is the limited academic studies into the financial performance of MSMEs, probably due to the unavailability of adequate data. The present research attempts to fill this gap by conducting a financial performance evaluation of 51 sample MSMEs based in the district of Nanded, Maharashtra. The research utilizes Data Envelopment Analysis (DEA) to compare the financial performance of sample MSMEs selectively using the suitable variables identified by Arasu et al. (2021). Findings suggest sharp differences in the financial performance of sample units. Inefficient units are suggested to improve their return on asset, return on capital employed, and net profit margin.
Shifters of participation in micro credit and credit in general in pakistanAlexander Decker
This study examines the factors influencing participation in microcredit programs and credit markets more broadly in Faisalabad, Pakistan. The study uses a binary logit model to analyze data collected from 85 microcredit borrowers and 100 non-borrowers. The results indicate that higher average propensity to consume, larger family size, and higher levels of education are positively associated with participation in credit markets. However, having more earners in the family is negatively related to participation. The study aims to identify determinants of credit access to inform policy recommendations for enhancing small traders' access to financing.
GST came to India as a medicine that would treat taxable diseases at one go. It was described by economists as the biggest economic reform after independence. Till the year 2017 indirect tax structure in India was a complex mixture of central taxes and state taxes, here different types of taxes were levied at different stages, which made the tax structure difficult and most of the taxes were not adjusted for this system tax. Increases effect such as taxes on taxes that increase the value of products and services. This economic reform is extremely essential for an emerging economic power like India. Impact of The last deputy speaker from the government, the government and the economy will present its influence in both positive and negative forms. This research of mine will throw light on the study of these two sides. Dr. Sumit Trivedi "Impact of GST on Different Classes" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-4 , June 2021, URL: https://www.ijtsrd.compapers/ijtsrd42333.pdf Paper URL: https://www.ijtsrd.commanagement/accounting-and-finance/42333/impact-of-gst-on-different-classes/dr-sumit-trivedi
Influence of External Equity Financing on Growth of Craft Micro Enterprises i...paperpublications3
Abstract: Micro enterprises together with small and medium enterprises provide employment and income to many people in Kenya. The main objective of the study was to establish the influence of external equity financing on growth of craft micro enterprises in Kenya. The target population for the study constituted all the 2334 craft micro enterprises. The sample frame constituted all the soapstone micro enterprises operating within Tabaka Town and all the woodcarving micro enterprises registered by Wote Town Council. The study used a sample of 330 craft micro enterprises drawn using stratified sampling technique. Data were gathered data using a semi-structured questionnaire after testing it for reliability and validity, and then analyzed by use of descriptive and inferential type of statistics. The ANOVA and multiple regression analysis were used to analyze the data. The findings of the study revealed that, external equity financing (p-value 0.000) has a significant influence on the growth of craft microenterprises. The study recommended that the government should sensitize and encourage the entrepreneurs on to use funds from friends and family members since these are cheap sources because they do not attract interests.
Keywords: Craft, External equity, Financing, Growth, Microenterprise, Tabaka.
Title: Influence of External Equity Financing on Growth of Craft Micro Enterprises in Kenya
Author: Steve Ondieki Nyanamba, Dr. Florence Sigara Memba, Dr. Willy Mwangi Muturi, Electrin Teresa Maswari
ISSN 2349-7807
International Journal of Recent Research in Commerce Economics and Management (IJRRCEM)
Paper Publications
An Exploratory Study of Internal Control and Fraud Prevention Measures in SMEsWaqas Tariq
Small business and entrepreneurship has emerged as an important area of research over the past 40 years. This paper revolves around the issues of the internal controls, fraud and it prevention measures on SMEs performance. The level of fraud incidence as reported by owners is still at a very low level and the overall cost incurred is still within expectation. However, there is a question of whether the low reported rate of fraud is due to adequate preventive actions currently employed by owners, or whether the owners are reluctant to reveal the truth in order to portray their efficiency and effectiveness in running their businesses. This conceptual paper attempts to analyze relevant literature on internal control, fraud, current trends on fraud and business crime prevention measure. Based on the literature, a future research could be suggested in the context of Malaysia. It is hoped that future research on this aspect will uncover the relationship between the effectiveness of internal control and fraud on SMEs and to gauge the adequacy of fraud prevention measure taken by SMEs owners in Malaysia. It is expected that effective internal control and the presence of appropriate fraud preventive measures will help to improve SMEs performance. KEYWORDS: Internal Control; Fraud; Small and Medium Enterprises
Predicting Corporate Failure - An Application of Discriminate Analysisscmsnoida5
Corporate failure is a serious problem being
confronted by the corporate world. This issue
has been a subject of intensive research and
discussion by economists, bankers, creditors,
equity shareholders, accountants, marketing
and management experts. The present study
aims at developing a model for prediction
of corporate failure on the basis of financial
ratios. The study is based on the data of
selected firms from chemical industry (with
equal number of failed and non failed firms).
The discriminant analysis has been used to
discriminate between failed and non failed
firms. It is concluded that some of the
financial ratios can significantly differentiate
between failed and non failed firms. The
finding will be useful for the banks and other
financial institutions in designing a suitable
credit appraisal and monitoring system for their
loans. This model could guide the policy makers
to prepare an early warning system to avoid
bankruptcy.
This summary analyzes the differences in corporate social responsibility disclosure (CSRD) between Sharia and non-Sharia banks in Indonesia. The study analyzed CSRD data from the annual reports of 3 state-owned non-Sharia banks (Bank Mandiri, BNI, BRI) and their corresponding Sharia banks (Bank Mandiri Sharia, BNI Sharia, BRI Sharia). Mann-Whitney tests found no significant overall difference in CSRD between the two bank types. However, non-Sharia banks tended to disclose more information on the environment, energy, and general information while Sharia banks disclosed more on Sharia-compliant financing activities. Both bank types disclosed similar information on other labor,
11.mollifying poverty through microfinance indian perspectiveAlexander Decker
This document summarizes the impact of microfinance programs in India. It discusses how microfinance has expanded access to credit and savings for rural and female populations, allowing entrepreneurship and diversification of livelihoods. Access to microcredit has increased across wealth categories but most significantly for very poor groups. Loans are primarily used for productive investments rather than consumption. Microfinance also contributes to improved education levels, asset acquisition, and multiple sources of household income. While more can still be done, microfinance is an effective strategy for extending financial services to disadvantaged groups and reducing poverty in India.
Measures for Achieving Financial Inclusion in India and Its Inclusive Growthiosrjce
Financial Inclusion is the first and foremost policy option to fulfil social and financial needs across
the country. The primary responsibility, in any country, is providing financial services to vulnerable groups to
improve their standard of living. “Fifty six percent of adults in the world do not have access to formal financial
services” (Oya Pinar Ardic, 2011), whereas “in India 89.3 million farmers i.e., 72.7% of total population, are
excluded from formal sources of finance” (KabitaKumariSahu, 2013). The Reserve Bank of India directed
commercial banks to promote financial inclusion in India which in turn results in the development of
economically backward areas. Rajan&Zingales, (1998) indicates that “there is a positive relationship between
financial developments with growth in banking industry through financial inclusion”. Leeladhar, (2006) states
that liberalization of banking services at an affordable cost to vast sections of disadvantaged and low-income
groups is essential for sustainable growth of an economy. As per the directions of RBI, all commercial banks
have been taking assistance from various social and financial entities like Joint Liability Groups, Non-Banking
Finance Companies (NBFC), Self-help groups, co-operative Banks, and Regional Rural Banks (RRBs) to
improve financial inclusion.“Financial inclusion is a very important, complementary and incremental approach
for inclusive development and poverty reduction” (Michael Chibba, 2009).The main objective of the study is to
know the status of financial inclusion in India and to give appropriate suggestions for inclusive growth of an
economy.
Impact of Web Advertisement on Customers Perception - A Case of Banking Sectorscmsnoida5
Nowadays a lot of innovative services are
offered by the financial service providers to their
customers. The use of more innovation in the
financial sector is the resultant of the day by day
advancement in the technology. Also customer
of today is well aware of the latest technology
and they demand their providers to execute
the technology for business prospective. Target
of all financial service providers’ advertisers
is to reach maximum customers. For this they
utilize every promotional and advertisement
channel so as to reach and inform maximum
public about their products. The purpose of
present study is to determine impact of web
advertisement on customer perception in case of
banking sector. The data will be collected from
200 approx respondents who are aware of the
web advertisements. The collected data will be
put in the Statistical Package for Social Sciences
(SPSS). Afterwards the regression analysis and
correlation analysis will be applied in order to
determine the impact of the web advertisement
on the purchase intention of the customers in
regards to the banking and investment products.
Gender Role in Performance of Small Scale Industry, Factors Affecting Women E...iosrjce
To identify the effect of the gender of owner on the small scale enterprise performance in Delhi (India)
is significant to investigate the relationship between gender and performance, and the difference in performance
between male owned and female owned businesses were stated. Using parametric statistical techniques
such as PLCC, the gender not only significantly effects the performance of the small business but shows a significant
difference in the levels of performance between male owned businesses and females owned businesses.
The National Foundation for Women Business Owners reported that between 1987 and 1994, the number of
women-owned businesses grew by 78% and women-owned firms accounted for 36% of all firms. Although the
growth in the number of women-owned businesses is encouraging, the size of such businesses remains small in
terms of both revenues and number of employees, especially in comparison to male-owned businesses quite often
because of the lack of financial .Women owners still face hard challenges in small scale industries and the
factors which influence the performance of female entrepreneur have been easily investigated by field study of
various small scale industries in disparate locations in Delhi and confronted with several policies recently formulated
for supporting the growth of small scale industry.
Corporate Governance Practices of Indian Public Sector and Private Sector Ban...scmsnoida5
This study examines the differences in corporate governance practices between public sector banks and private sector banks in India. An assessment tool called the Corporate Governance Disclosure Index (CGDI) was used to analyze annual reports from 2002-2014 of top public and private sector banks. Statistical analysis found some significant differences between the two sectors. Private banks had stronger practices related to board structure and remuneration committees. Both sectors differed significantly in adopting non-mandatory recommendations, with private banks exceeding in compliance. However, there were no major differences found regarding transparency/disclosure practices and shareholders' rights. The study aims to compare governance quality between Indian public and private banks.
The life insurance industry in Sri Lanka has been in existence for over eighty years. However, life
insurance penetration rates have been stagnant over a period of time. The complexities that are inherent in a
life insurance policy and the emergence of the millennial generation in Sri Lanka is seen by many to have a
significant impact on the insurance industry, further stagnating growth
This document summarizes a study that analyzes factors influencing corporate governance disclosure in the banking industries listed on the Indonesia Stock Exchange from 2009 to 2011. The study examines how dispersion ownership, company size, profitability, listing age, and board of commissioner size affect corporate governance disclosure levels. It develops hypotheses about the relationship between each of these factors and disclosure based on prior literature. The methodology describes the sample selection of 71 banking companies and use of a disclosure index calculated from annual report data to measure corporate governance disclosure levels.
Impact of shg bank linkage programme on women shgs empowerment with reference...prjpublications
This document summarizes a study on the impact of India's Self Help Group Bank Linkage Program (SBLP) on women's self-help groups (SHGs) and empowerment. Some key findings:
- Between 2007-2012, the number of SHGs with bank savings increased 91.33% to over 79 million SHGs, while loans disbursed grew 151.65% to over $16.5 billion.
- Women-led SHGs dominated the program, comprising over 79% of all SHGs. Savings, loans disbursed, and loans outstanding for women SHGs all increased substantially between 2007-2012.
- The study found SBLP has been largely successful in
This study examines the role of microfinance institutions (MFIs) in strengthening micro enterprises in the context of India's "Make in India" initiative. It finds that MFIs can fill financing gaps of 40-50% for micro enterprises, which formal institutions often do not serve well due to low average loan sizes. The study also analyzes how MFIs and micro enterprise clusters could better align through strategies like self-help groups and the MUDRA Bank to improve access to credit. The conclusion is that strengthening MFI support for micro units can help them access more formal financing to grow stronger and better contribute to the goals of Make in India.
Financial Inclusion and its Determinants - IndiaDr Lendy Spires
This document summarizes a study that analyzes the determinants of financial inclusion in India using state-level panel data from 1995 to 2008. The study finds that increasing bank branch networks, as measured by average population per branch, has a beneficial impact on deposit penetration but a weaker impact on credit penetration. Higher state income levels are also found to have a positive impact on both credit and deposit penetration. Additionally, states with higher proportions of factories and employees tend to have greater banking activity and financial inclusion. The study concludes that policy attention should focus on low-performing regions to help close gaps in financial inclusion compared to better-performing regions.
This document discusses financial inclusion in India. It defines financial inclusion as providing access to formal financial services and credit to all members of society. In India, financial inclusion efforts began in 2005 with pilot programs opening bank accounts in rural villages. The Reserve Bank of India works to promote financial inclusion through business correspondents, relaxed KYC norms, and credit programs. As of 2012, progress included over 100 million "no-frills" bank accounts, over 1 million banking access points, and nearly 1 billion dollars in outstanding balances in rural accounts. However, illiteracy and lack of infrastructure in rural areas continue to pose challenges to full financial inclusion in India.
Financial inclusion aims to provide banking services to all individuals in a fair manner. In India, financial inclusion first began as a pilot project in 2005 and has since expanded through various government initiatives. Key aspects of financial inclusion in India include the establishment of "no-frills" bank accounts, use of business correspondents to expand access, and the goal of opening 600 million new customer accounts by 2020. However, challenges remain due to issues like illiteracy and lack of adequate banking infrastructure in rural areas. The document reviews literature on financial inclusion and provides data on banking access and account ownership across Indian states.
ECONOMIC PROBLEMS OF INFORMAL (UNORGANIZED) SECTOR PROFESSIONALS IN NAGPUR DI...IAEME Publication
Indian retail is dominated by a large number of small retailers consisting of the local kirana shops, owner-manned general stores, chemists, footwear shops, apparel shops, paan and beedi (local betel leaf and tobacco) shops, hand-cart hawkers, pavement vendors, etc. which together make up the so-called "unorganized retail" or traditional retail. The last few years have witnessed the entry of a number of organized retailers opening stores in various modern formats in metros and other important cities. Unorganized retailers normally do not pay taxes and most of them are not even registered for sales tax, VAT, or income tax. (Zia and Azam, 2013)
Retailing in India is predominantly unorganized. According to a survey by AT Kearney, an overwhelming proportion of the Rs. 400,000 crore retail markets are unorganized in India. In fact, only a Rs. 20,000 crore segment of the market is organized.
Microfinance associations provide value to microfinance institutions (MFIs) in several ways:
1) They conduct research to inform the sector and provide MFIs with broader context and perspectives beyond their individual operations.
2) They develop broad-based knowledge of the sector to help stakeholders such as investors and governments and help streamline information.
3) They create a non-political forum for dialogue among members to educate the public and increase credibility and acceptance of microfinance products and services.
This document summarizes a research project submitted in partial fulfillment of a Bachelor of Science degree in Management and Accounting. The project examines the role of microfinance banks in financing small and medium enterprises in Osun State, Nigeria.
The summary is as follows:
1) The research project investigates the role of microfinance banks in providing credit, savings options, and services to small and medium enterprises and examines the impact on their performance.
2) Primary data was collected through questionnaires distributed to 100 small and medium enterprises in Oshogbo and Ile Ife.
3) Descriptive statistics and multivariate regression analysis were used to analyze the data and determine the relative importance of credit, savings,
- Microenterprises make up over 90% of businesses in the Philippines and are important for economic growth, yet many lack access to financial services. Microfinance provides loans, savings, and other services to these small businesses and low-income households.
- Key principles of microfinance include targeting the poor, linking financial services to microenterprises, and designing innovative products like group lending and flexible terms. Leading programs have expanded microfinance access through banks, NGOs, and cooperatives.
- The Bangko Sentral ng Pilipinas promotes microfinance through policies, training, and advocacy to help banks better serve microenterprises and their communities. Over 200 banks have provided microloans
Role of microfinance in promoting micro entrepreneurshipVijayakumar Kumar
This document discusses the role of microfinance in promoting micro-entrepreneurship in India. It begins by defining key terms like microenterprise and microfinance. Microenterprises are very small businesses, often with just one employee owner, while microfinance provides small loans and other financial services to the poor. The document then outlines the various models of microfinance that have been implemented in India, including self-help groups linked to banks. It argues that microenterprises are important for employment generation and poverty alleviation in rural areas. Access to microfinance can play a key role in meeting the credit needs of the rural poor to start micro-businesses.
GST came to India as a medicine that would treat taxable diseases at one go. It was described by economists as the biggest economic reform after independence. Till the year 2017 indirect tax structure in India was a complex mixture of central taxes and state taxes, here different types of taxes were levied at different stages, which made the tax structure difficult and most of the taxes were not adjusted for this system tax. Increases effect such as taxes on taxes that increase the value of products and services. This economic reform is extremely essential for an emerging economic power like India. Impact of The last deputy speaker from the government, the government and the economy will present its influence in both positive and negative forms. This research of mine will throw light on the study of these two sides. Dr. Sumit Trivedi "Impact of GST on Different Classes" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-4 , June 2021, URL: https://www.ijtsrd.compapers/ijtsrd42333.pdf Paper URL: https://www.ijtsrd.commanagement/accounting-and-finance/42333/impact-of-gst-on-different-classes/dr-sumit-trivedi
Influence of External Equity Financing on Growth of Craft Micro Enterprises i...paperpublications3
Abstract: Micro enterprises together with small and medium enterprises provide employment and income to many people in Kenya. The main objective of the study was to establish the influence of external equity financing on growth of craft micro enterprises in Kenya. The target population for the study constituted all the 2334 craft micro enterprises. The sample frame constituted all the soapstone micro enterprises operating within Tabaka Town and all the woodcarving micro enterprises registered by Wote Town Council. The study used a sample of 330 craft micro enterprises drawn using stratified sampling technique. Data were gathered data using a semi-structured questionnaire after testing it for reliability and validity, and then analyzed by use of descriptive and inferential type of statistics. The ANOVA and multiple regression analysis were used to analyze the data. The findings of the study revealed that, external equity financing (p-value 0.000) has a significant influence on the growth of craft microenterprises. The study recommended that the government should sensitize and encourage the entrepreneurs on to use funds from friends and family members since these are cheap sources because they do not attract interests.
Keywords: Craft, External equity, Financing, Growth, Microenterprise, Tabaka.
Title: Influence of External Equity Financing on Growth of Craft Micro Enterprises in Kenya
Author: Steve Ondieki Nyanamba, Dr. Florence Sigara Memba, Dr. Willy Mwangi Muturi, Electrin Teresa Maswari
ISSN 2349-7807
International Journal of Recent Research in Commerce Economics and Management (IJRRCEM)
Paper Publications
An Exploratory Study of Internal Control and Fraud Prevention Measures in SMEsWaqas Tariq
Small business and entrepreneurship has emerged as an important area of research over the past 40 years. This paper revolves around the issues of the internal controls, fraud and it prevention measures on SMEs performance. The level of fraud incidence as reported by owners is still at a very low level and the overall cost incurred is still within expectation. However, there is a question of whether the low reported rate of fraud is due to adequate preventive actions currently employed by owners, or whether the owners are reluctant to reveal the truth in order to portray their efficiency and effectiveness in running their businesses. This conceptual paper attempts to analyze relevant literature on internal control, fraud, current trends on fraud and business crime prevention measure. Based on the literature, a future research could be suggested in the context of Malaysia. It is hoped that future research on this aspect will uncover the relationship between the effectiveness of internal control and fraud on SMEs and to gauge the adequacy of fraud prevention measure taken by SMEs owners in Malaysia. It is expected that effective internal control and the presence of appropriate fraud preventive measures will help to improve SMEs performance. KEYWORDS: Internal Control; Fraud; Small and Medium Enterprises
Predicting Corporate Failure - An Application of Discriminate Analysisscmsnoida5
Corporate failure is a serious problem being
confronted by the corporate world. This issue
has been a subject of intensive research and
discussion by economists, bankers, creditors,
equity shareholders, accountants, marketing
and management experts. The present study
aims at developing a model for prediction
of corporate failure on the basis of financial
ratios. The study is based on the data of
selected firms from chemical industry (with
equal number of failed and non failed firms).
The discriminant analysis has been used to
discriminate between failed and non failed
firms. It is concluded that some of the
financial ratios can significantly differentiate
between failed and non failed firms. The
finding will be useful for the banks and other
financial institutions in designing a suitable
credit appraisal and monitoring system for their
loans. This model could guide the policy makers
to prepare an early warning system to avoid
bankruptcy.
This summary analyzes the differences in corporate social responsibility disclosure (CSRD) between Sharia and non-Sharia banks in Indonesia. The study analyzed CSRD data from the annual reports of 3 state-owned non-Sharia banks (Bank Mandiri, BNI, BRI) and their corresponding Sharia banks (Bank Mandiri Sharia, BNI Sharia, BRI Sharia). Mann-Whitney tests found no significant overall difference in CSRD between the two bank types. However, non-Sharia banks tended to disclose more information on the environment, energy, and general information while Sharia banks disclosed more on Sharia-compliant financing activities. Both bank types disclosed similar information on other labor,
11.mollifying poverty through microfinance indian perspectiveAlexander Decker
This document summarizes the impact of microfinance programs in India. It discusses how microfinance has expanded access to credit and savings for rural and female populations, allowing entrepreneurship and diversification of livelihoods. Access to microcredit has increased across wealth categories but most significantly for very poor groups. Loans are primarily used for productive investments rather than consumption. Microfinance also contributes to improved education levels, asset acquisition, and multiple sources of household income. While more can still be done, microfinance is an effective strategy for extending financial services to disadvantaged groups and reducing poverty in India.
Measures for Achieving Financial Inclusion in India and Its Inclusive Growthiosrjce
Financial Inclusion is the first and foremost policy option to fulfil social and financial needs across
the country. The primary responsibility, in any country, is providing financial services to vulnerable groups to
improve their standard of living. “Fifty six percent of adults in the world do not have access to formal financial
services” (Oya Pinar Ardic, 2011), whereas “in India 89.3 million farmers i.e., 72.7% of total population, are
excluded from formal sources of finance” (KabitaKumariSahu, 2013). The Reserve Bank of India directed
commercial banks to promote financial inclusion in India which in turn results in the development of
economically backward areas. Rajan&Zingales, (1998) indicates that “there is a positive relationship between
financial developments with growth in banking industry through financial inclusion”. Leeladhar, (2006) states
that liberalization of banking services at an affordable cost to vast sections of disadvantaged and low-income
groups is essential for sustainable growth of an economy. As per the directions of RBI, all commercial banks
have been taking assistance from various social and financial entities like Joint Liability Groups, Non-Banking
Finance Companies (NBFC), Self-help groups, co-operative Banks, and Regional Rural Banks (RRBs) to
improve financial inclusion.“Financial inclusion is a very important, complementary and incremental approach
for inclusive development and poverty reduction” (Michael Chibba, 2009).The main objective of the study is to
know the status of financial inclusion in India and to give appropriate suggestions for inclusive growth of an
economy.
Impact of Web Advertisement on Customers Perception - A Case of Banking Sectorscmsnoida5
Nowadays a lot of innovative services are
offered by the financial service providers to their
customers. The use of more innovation in the
financial sector is the resultant of the day by day
advancement in the technology. Also customer
of today is well aware of the latest technology
and they demand their providers to execute
the technology for business prospective. Target
of all financial service providers’ advertisers
is to reach maximum customers. For this they
utilize every promotional and advertisement
channel so as to reach and inform maximum
public about their products. The purpose of
present study is to determine impact of web
advertisement on customer perception in case of
banking sector. The data will be collected from
200 approx respondents who are aware of the
web advertisements. The collected data will be
put in the Statistical Package for Social Sciences
(SPSS). Afterwards the regression analysis and
correlation analysis will be applied in order to
determine the impact of the web advertisement
on the purchase intention of the customers in
regards to the banking and investment products.
Gender Role in Performance of Small Scale Industry, Factors Affecting Women E...iosrjce
To identify the effect of the gender of owner on the small scale enterprise performance in Delhi (India)
is significant to investigate the relationship between gender and performance, and the difference in performance
between male owned and female owned businesses were stated. Using parametric statistical techniques
such as PLCC, the gender not only significantly effects the performance of the small business but shows a significant
difference in the levels of performance between male owned businesses and females owned businesses.
The National Foundation for Women Business Owners reported that between 1987 and 1994, the number of
women-owned businesses grew by 78% and women-owned firms accounted for 36% of all firms. Although the
growth in the number of women-owned businesses is encouraging, the size of such businesses remains small in
terms of both revenues and number of employees, especially in comparison to male-owned businesses quite often
because of the lack of financial .Women owners still face hard challenges in small scale industries and the
factors which influence the performance of female entrepreneur have been easily investigated by field study of
various small scale industries in disparate locations in Delhi and confronted with several policies recently formulated
for supporting the growth of small scale industry.
Corporate Governance Practices of Indian Public Sector and Private Sector Ban...scmsnoida5
This study examines the differences in corporate governance practices between public sector banks and private sector banks in India. An assessment tool called the Corporate Governance Disclosure Index (CGDI) was used to analyze annual reports from 2002-2014 of top public and private sector banks. Statistical analysis found some significant differences between the two sectors. Private banks had stronger practices related to board structure and remuneration committees. Both sectors differed significantly in adopting non-mandatory recommendations, with private banks exceeding in compliance. However, there were no major differences found regarding transparency/disclosure practices and shareholders' rights. The study aims to compare governance quality between Indian public and private banks.
The life insurance industry in Sri Lanka has been in existence for over eighty years. However, life
insurance penetration rates have been stagnant over a period of time. The complexities that are inherent in a
life insurance policy and the emergence of the millennial generation in Sri Lanka is seen by many to have a
significant impact on the insurance industry, further stagnating growth
This document summarizes a study that analyzes factors influencing corporate governance disclosure in the banking industries listed on the Indonesia Stock Exchange from 2009 to 2011. The study examines how dispersion ownership, company size, profitability, listing age, and board of commissioner size affect corporate governance disclosure levels. It develops hypotheses about the relationship between each of these factors and disclosure based on prior literature. The methodology describes the sample selection of 71 banking companies and use of a disclosure index calculated from annual report data to measure corporate governance disclosure levels.
Impact of shg bank linkage programme on women shgs empowerment with reference...prjpublications
This document summarizes a study on the impact of India's Self Help Group Bank Linkage Program (SBLP) on women's self-help groups (SHGs) and empowerment. Some key findings:
- Between 2007-2012, the number of SHGs with bank savings increased 91.33% to over 79 million SHGs, while loans disbursed grew 151.65% to over $16.5 billion.
- Women-led SHGs dominated the program, comprising over 79% of all SHGs. Savings, loans disbursed, and loans outstanding for women SHGs all increased substantially between 2007-2012.
- The study found SBLP has been largely successful in
This study examines the role of microfinance institutions (MFIs) in strengthening micro enterprises in the context of India's "Make in India" initiative. It finds that MFIs can fill financing gaps of 40-50% for micro enterprises, which formal institutions often do not serve well due to low average loan sizes. The study also analyzes how MFIs and micro enterprise clusters could better align through strategies like self-help groups and the MUDRA Bank to improve access to credit. The conclusion is that strengthening MFI support for micro units can help them access more formal financing to grow stronger and better contribute to the goals of Make in India.
Financial Inclusion and its Determinants - IndiaDr Lendy Spires
This document summarizes a study that analyzes the determinants of financial inclusion in India using state-level panel data from 1995 to 2008. The study finds that increasing bank branch networks, as measured by average population per branch, has a beneficial impact on deposit penetration but a weaker impact on credit penetration. Higher state income levels are also found to have a positive impact on both credit and deposit penetration. Additionally, states with higher proportions of factories and employees tend to have greater banking activity and financial inclusion. The study concludes that policy attention should focus on low-performing regions to help close gaps in financial inclusion compared to better-performing regions.
This document discusses financial inclusion in India. It defines financial inclusion as providing access to formal financial services and credit to all members of society. In India, financial inclusion efforts began in 2005 with pilot programs opening bank accounts in rural villages. The Reserve Bank of India works to promote financial inclusion through business correspondents, relaxed KYC norms, and credit programs. As of 2012, progress included over 100 million "no-frills" bank accounts, over 1 million banking access points, and nearly 1 billion dollars in outstanding balances in rural accounts. However, illiteracy and lack of infrastructure in rural areas continue to pose challenges to full financial inclusion in India.
Financial inclusion aims to provide banking services to all individuals in a fair manner. In India, financial inclusion first began as a pilot project in 2005 and has since expanded through various government initiatives. Key aspects of financial inclusion in India include the establishment of "no-frills" bank accounts, use of business correspondents to expand access, and the goal of opening 600 million new customer accounts by 2020. However, challenges remain due to issues like illiteracy and lack of adequate banking infrastructure in rural areas. The document reviews literature on financial inclusion and provides data on banking access and account ownership across Indian states.
ECONOMIC PROBLEMS OF INFORMAL (UNORGANIZED) SECTOR PROFESSIONALS IN NAGPUR DI...IAEME Publication
Indian retail is dominated by a large number of small retailers consisting of the local kirana shops, owner-manned general stores, chemists, footwear shops, apparel shops, paan and beedi (local betel leaf and tobacco) shops, hand-cart hawkers, pavement vendors, etc. which together make up the so-called "unorganized retail" or traditional retail. The last few years have witnessed the entry of a number of organized retailers opening stores in various modern formats in metros and other important cities. Unorganized retailers normally do not pay taxes and most of them are not even registered for sales tax, VAT, or income tax. (Zia and Azam, 2013)
Retailing in India is predominantly unorganized. According to a survey by AT Kearney, an overwhelming proportion of the Rs. 400,000 crore retail markets are unorganized in India. In fact, only a Rs. 20,000 crore segment of the market is organized.
Microfinance associations provide value to microfinance institutions (MFIs) in several ways:
1) They conduct research to inform the sector and provide MFIs with broader context and perspectives beyond their individual operations.
2) They develop broad-based knowledge of the sector to help stakeholders such as investors and governments and help streamline information.
3) They create a non-political forum for dialogue among members to educate the public and increase credibility and acceptance of microfinance products and services.
This document summarizes a research project submitted in partial fulfillment of a Bachelor of Science degree in Management and Accounting. The project examines the role of microfinance banks in financing small and medium enterprises in Osun State, Nigeria.
The summary is as follows:
1) The research project investigates the role of microfinance banks in providing credit, savings options, and services to small and medium enterprises and examines the impact on their performance.
2) Primary data was collected through questionnaires distributed to 100 small and medium enterprises in Oshogbo and Ile Ife.
3) Descriptive statistics and multivariate regression analysis were used to analyze the data and determine the relative importance of credit, savings,
- Microenterprises make up over 90% of businesses in the Philippines and are important for economic growth, yet many lack access to financial services. Microfinance provides loans, savings, and other services to these small businesses and low-income households.
- Key principles of microfinance include targeting the poor, linking financial services to microenterprises, and designing innovative products like group lending and flexible terms. Leading programs have expanded microfinance access through banks, NGOs, and cooperatives.
- The Bangko Sentral ng Pilipinas promotes microfinance through policies, training, and advocacy to help banks better serve microenterprises and their communities. Over 200 banks have provided microloans
Role of microfinance in promoting micro entrepreneurshipVijayakumar Kumar
This document discusses the role of microfinance in promoting micro-entrepreneurship in India. It begins by defining key terms like microenterprise and microfinance. Microenterprises are very small businesses, often with just one employee owner, while microfinance provides small loans and other financial services to the poor. The document then outlines the various models of microfinance that have been implemented in India, including self-help groups linked to banks. It argues that microenterprises are important for employment generation and poverty alleviation in rural areas. Access to microfinance can play a key role in meeting the credit needs of the rural poor to start micro-businesses.
Presentation includes Introduction to Microfinance Industry, Business Process, Strategies, Key Challenges, Future Outlook and Special Issues like Urban Microfinance & Rating of Microfinance Institutions
The role of small scale industries in indiaArnav Dhankad
Small scale industries play an important role in the Indian economy by contributing significantly to industrial output, exports, and employment. They account for about 40% of industrial output and create the largest number of jobs after agriculture. Food products, non-metallic mineral products, and metal products are some of the largest employment generating small scale industries in India.
This document is a research project report submitted in partial fulfillment of an MBA degree. It examines the impact of microfinance on the living standards, empowerment and poverty alleviation of poor women in North India. The report includes a declaration by the student, acknowledgements of those who assisted and supervised the project, and an introduction providing context on microfinance and its goals. It also outlines the chapters to follow, which will cover a literature review on previous research conducted on microfinance and its effects, as well as subsequent chapters analyzing and discussing the results of the student's case study research.
A Study On The Performance Of Microfinance Institutions In IndiaAudrey Britton
This document summarizes a study on the performance of microfinance institutions (MFIs) in India. It finds that the number of MFIs borrowing from banks increased substantially from 2015-2016 to 2016-2017, but total bank loans to MFIs decreased slightly over that period. Loan amounts outstanding to MFIs increased each year. The study also found MFI business models are becoming more urban-centric, as rural client bases declined in most states except a few. The proportion of income generation loans increased from 2015 to 2017. Financial indicators for MFIs like returns on assets and equity increased over this period, while total assets sharply declined.
Factors affecting financial sustainability of microfinance institutionsAlexander Decker
This document discusses factors that affect the financial sustainability of microfinance institutions (MFIs). It begins with background on microfinance programs and defines financial sustainability. The study aims to identify factors influencing MFI financial sustainability and develop a financial sustainability index. Regression analysis of MFI data from India and Bangladesh found that capital/asset ratio, operating expenses/loan portfolio, and portfolio at risk >30 days influence sustainability. The document proposes a financial sustainability index model based on these factors and operational self-sufficiency, assigning weights based on various agencies' use of the indicators. The model converts indicator data to a common scale to calculate total standard scores as a sustainability index.
Financial Inclusion and Micro and Small Enterprises GrowthDr. Amarjeet Singh
The persons or firms linked with the either way of
financial transaction are known as participants of financial
inclusion financially included otherwise financially
excluded. The normal way of flow of money is routed
through banking system, post office, insurance and FBFC
channels. The MSE is financially included with operation of
saving account, current account or loan account with banks;
financial transaction with other government financial
agencies as well as some private sector NBFC. Recent
initiatives of Government of India and Indian Banking
system have accelerated the performance of financial
inclusion through various schemes such as MNREGS,
Jandhan, Atal Pension Yojna, MUDRA and so forth. The
MUDRA scheme, credit scheme for MSE, credit scheme for
KVIC & Coir firm, Kishan credit card, General Credit
Card are exclusive financial inclusion scheme for MSE
credit. Out of total size of MSEs, less than forty percent
units are getting benefits from schedule commercial banks;
as on 2017-18 only Rs. 1337 billion credit facilities given by
the lending institutions. The paper examines the current
status and potential prospect of financial inclusion at given
numbers of units and employment.
A STUDY ON THE TREND AND GROWTH OF MICROFINANCE INSTITUTIONS IN INDIACharlie Congdon
This document analyzes the trend and growth of microfinance institutions in India. Some key findings include:
1) The number of MFIs availing loans from banks increased sharply from 9.8% in 2019-20 to 257.6% in 2020-21.
2) Loan amounts outstanding to MFIs increased year-over-year from 2016-17 to 2020-21, showing growing confidence in MFIs.
3) However, the total assets of MFIs saw a sharp decline over this period, indicating potential financial challenges.
4) The business models of MFIs are becoming more urban-centric, as the share of rural clients declined in most states from 2016-
This document summarizes a study on the impact of microfinancing on the performance of small and medium enterprises (SMEs) in Ghana. It begins with an introduction to microfinancing and importance of SMEs. It then reviews previous literature that has examined the relationship between microfinancing and SME performance. The methodology section describes how the study used a survey of 100 SMEs in Okaishie market in Ghana. Results found that most SME entrepreneurs were male, in the 36-55 age range, and had received some level of education. Over half of SMEs had benefited from microfinancing products and services.
This study analyzed the factors affecting loan repayment performances in Microfinance Institutions (MFIs) with
a case study of (Promotion of Rural Initiatives and Development Enterprises) PRIDE Arusha, Tanzania. The
study used both quantitative and qualitative techniques to investigate factors affecting loan repayment
performances. The findings show that clients’ characteristics (age, household size, gender and level of
education), nature of business (business type, business stability and income level) and loan characteristics
(repayment period, repayment mode, and repayment amount) were among the factors that influenced borrowers
in repaying their loans. Lack of business knowledge was another factor mentioned by clients which leads to low
productivity hence failure to have enough fund to repay their loans.
The study further revealed that there was a significant relationship between loan repayment performances with
clients’ businesses challenges, loan diversification to other non-income activities, and other outside factors such
market imperfections, higher interest charges, drought, among others.
The document provides an industry profile of microfinance institutions (MFIs) in India. It discusses that MFIs provide small loans and other financial services to low-income groups. The microfinance industry in India has experienced rapid growth in recent years, reaching over 200 million customers. However, there remains significant unmet demand as many parts of India remain underserved by MFIs. The industry is fragmented with over 3000 MFIs, though the top 10 companies account for around three-quarters of the total loan portfolio. Continued growth is expected, but regulations and competition will impact the future trajectory of MFIs in India.
Microfinance and strategy of financial inclusion in indiaAlexander Decker
This document discusses microfinance and financial inclusion in India. It notes that while India has made progress in expanding access to banking, many rural and low-income populations still lack access to formal financial services. Microfinance institutions like self-help groups have played an important role in promoting financial inclusion. The document examines different approaches to financial inclusion in India, the role of banks and microfinance, and challenges remaining around expanding access in a sustainable way.
Microfinance alludes to little scale monetary administration for both
credits and stores that are given to individuals who homestead or fish or
crowd; work little or miniaturized scale ventures where merchandise are
delivered, reused, repaired, or exchanged; if administrations ;work for
wages or commissions ;pick up in-originate from leasing little measures of
area, vehicles, draft creatures ,or apparatus and apparatuses; and to
different people and nearby gatherings in creating nations, in both rustic
and urban ranges. Micro credits are given to business people excessively
poor, this study has accordingly, made an endeavour to analyse the part of
Microfinance and developing economy in India. It is a platform to deliver
financial products and complementary services reaching the poor in order
to get them out of poverty. By providing capital, trust, social esteem,
information, knowledge, competences, empowerment, networking, social
capital, technology and market access, microfinance institutions and other
sources of microfinance become active subject in the fight against poverty
in all its dimensions and levels. The integral development of the human
potential of the client and of her/his family, neighbourhood, and social networks is fostered by both well-established and innovative financial
products, whose high repayment ratio, remunerative interest rate (or
price) and low administrative cost guarantee the economic sustainability
of a well-managed institution.
Microfinance in India: A New Perspective Facilitating Self Employment for the...professionalpanorama
This document discusses microfinance in India and its role in facilitating self-employment for the poor. It provides an overview of how microfinance works in India, highlighting that small loans are provided to the poor to start or expand small businesses and generate additional income. It also analyzes the operational expenses of microfinance institutions (MFIs) and self-help groups (SHGs) that provide microfinance services. The key findings are that operating costs, not profits, make up the majority of interest rates charged by MFIs. It estimates that MFIs and SHGs could together reach over 18 million and 54 million poor households, respectively, by 2010 if sufficient funding is available to support their growth targets.
Effects of micro- finance institutions' services on sustainability of small e...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
IRJET- Challenges Faced by Roadside Women EntrepreneursIRJET Journal
This document discusses the challenges faced by roadside women entrepreneurs in India. It notes that while women's entrepreneurship is growing in importance, roadside women entrepreneurs still face significant challenges, including lack of access to capital and financing due to lack of collateral, limited mobility and family responsibilities, and stiff competition. It provides statistics on the current status of women's entrepreneurship in India and outlines various government schemes aimed at supporting women entrepreneurs. However, it concludes that roadside women entrepreneurs still struggle with issues like low incomes from their small businesses due to undercapitalization.
Microfinance in India provides small loans and other financial services to the poor, especially women. Approximately 300 million people in India live below the poverty line, and only 20% have access to formal credit. Self-help groups are a common model, with groups of 10-20 women saving together and lending to each other. NABARD, India's agricultural bank, supports microfinance through refinancing loans and programs. Microfinance has grown substantially and helped many poor households rise out of poverty.
FINANCIAL PERFORMANCE OF MICROFINANCE INSTITUTIONSRupa R
The document provides an introduction and background to a study comparing the financial performance of microfinance institutions (MFIs) in India and Bangladesh. It outlines the research methodology, which involves analyzing seven categories of financial performance indicators for 46 Indian MFIs and 25 Bangladeshi MFIs over 2007-2012 using statistical tools. Hypotheses that performance is similar across countries and does not depend on age or only financial factors will be tested. Multiple regression analysis will examine the influence of institutional characteristics, outreach, financial performance, revenues/expenses, efficiency, and risk on overall performance.
AN EMPIRICAL STUDY ON CLIENT SATISFACTION TOWARDS PRODUCT QUALITY ATTRIBUTES ...IAEME Publication
Microfinance means providing financial assistance to poorest of the poor to alleviate poverty. It seems to be the effective tool to poverty alleviation with its social objectives. Today, Grama Vidiyal has become one of the largest Microfinance Institutions in India. Grama Vidiyal Microfinance programme crosses the Rs. 1 billion cumulative loan disbursement mark.
Today GVMFL serves one million households in 4 states of India utilising the dedicated services of more than 2800 employees. Thus far, GVMFL had disbursed 18 billion ($398 million) for various income generating activities and the present loan outstanding portfolio is 6 billion ($128million).
Dynamic capabilities and performance in the context of microfinance instituti...hunypink
This document summarizes a research study that will examine how dynamic capabilities affect the performance of microfinance institutions in Kenya. It will focus on 13 licensed microfinance institutions from 2017 to 2018. The study will assess how absorptive capability, adaptive capability, innovative capability, and networking capability impact various performance measures. It will also analyze whether strategic choice and business regulatory environment moderate the relationship between dynamic capabilities and performance. The research will use theories on dynamic capabilities, strategic choice, and institutions to guide the study. It will employ a quantitative research design using surveys and secondary data to collect information on the variables.
MODELLING THE PREDICTION OF FARMERS' LOAN REPAYMENT IN PRIMARY AGRICUTURAL CO...IAEME Publication
Money, the vital element of economy, is indispensable to Agriculturists too. In India the farming community is subject to various vagaries to continue to be farmers and boost GDP of our Nation. In this Co-operative banks also play an important role despite the low percentage of repayment by farmers promptly coupled with high level of pressure for farmers for loan for continuing agricultural activities while the resource is requiring its cost to make it readily available at the time of all farming activities. There are many socio psychological factors. Affecting recovery of lending institutions resulting in a hard situation for credit societies and banks to continue lending. Here the study is on factors that could predict ways and means of recovery from farmers.
The main objective of microfinance is that the poor have access to financial services at a very low cost without any collateral, and have design its microfinance products by focusing on the demands and needs of the customers to enable the microfinance institution to increase its reach among the poor, focusing on the quality of their services along with their products for the appropriate service Customers try to avail its services. In today's era of advertisement, there no organization able to generate demands to avail its services to its customers without publicity, so in order to improve its services, MFI has to take attention to publicity. This research paper is divided into five sections, the first introduction in which you introduce microfinance and service quality in India, customer's debt repayment intention with credit objective attainment. The second section review of the literature, in which includes some research by the researcher in the field of microfinance service quality from around the world, because there is very little work has been done in India so far.
The third section is the research Methodology section, where the researcher described to analyze, for data collection distributing a six-point Likert scale questionnaire distributed among a joint liability group run by SC / ST women in a small town named Rajepur under Unnao district in the Uttar Pradesh. The fourth section is analysis and description, in order to check the quality of services, three elements of the SERVQUAL model have been used, using a simple language for description, the quantitative analysis has been done.
the fourth section of the research paper is conclusion and recommendation, this paper concluded that due to customer's loan repayments intention with credit reliability, is willing to take advantages of MFI's services by taking care of quality services, the researcher recommended is that MFI has to focus on marketing strategy among customers along with increasing research activities with collaboration of educational institutions and research scholars. Because any academic research plays a crucial role in developing society.
Determinants of relevancy of micro financial services to sm es and clients’ r...Alexander Decker
This document summarizes a research study that investigated factors influencing the relevance of microfinancial services to small and medium enterprises (SMEs) in Tanzania. The study analyzed five factors: the terms and conditions of lending, product development and innovation, responsiveness to client requests, problem handling for clients, and quality of services. Survey data was collected from microfinance institution clients and staff. Correlation analysis found weak relationships between the factors and service relevance. Client responsiveness to relevance was also questionable. The study aims to help improve microfinance strategies and policies to better support SME development in Tanzania.
- The document discusses SME financing in Bangladesh, including its importance to the economy and challenges faced.
- SMEs account for about 45% of manufacturing value addition in Bangladesh and contribute around 20-25% of GDP. However, they face difficulties obtaining financing from commercial banks.
- The study aims to identify constraints related to SME financing in Bangladesh and provide policy implications to improve their performance and contribution to the economy. It reviews several past studies on challenges including high interest rates, lack of infrastructure, and information gaps.
Similar to Determinants of the efficiency of microfinance borrowers and non borrowers-evidence from pakistan (20)
Abnormalities of hormones and inflammatory cytokines in women affected with p...Alexander Decker
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Determinants of the efficiency of microfinance borrowers and non borrowers-evidence from pakistan
1. European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.5, No.18, 2013
167
Determinants of the efficiency of Microfinance Borrowers and
non-borrowers: Evidence from Pakistan
Imran Qaiser ( Corresponding Author)
Department of Economics, GC University, Faisalabad, Pakistan
Email: Iq_fighting@yahoo.com
Dr. Nadeem Sohail
College of Commerce, GC University, Faisalabad, Pakistan
Email: Sohail5241@hotmail.com
Abstract
This study explores, whether micro finance is being efficiently used or not. As it has been observed that most of
the micro finance is used for the non productive purpose. Where as the purpose of lending this credit is to
finance the borrowers so that they could enhance their output and inputs. Data Envelopment Analysis was used
in this study to find the efficiency scores of the borrowers. There after, Tobit regression was used in the second
stage to explore the determinants of the efficiency. A total of 122 traders of micro level including 43 borrowers
and 79 non-borrowers were interviewed to fill the questionnaires. While comparing microfinance borrowers with
non-borrowers, it was found that microfinance borrowers were significantly more efficient than the small scale
borrowers. Average Propensity to Consume (APC) is one of the major factors that has a negative impact on the
efficiency. Education was found to have a positive impact on the technical efficiency of the traders. People are
generally quite reluctant to take the loan from microfinance institutions due to insufficient amount offered, high
interest rate and return of loan in monthly installments. That make the loan less efficient. Therefore it has been
recommended the microfinance institutions to overcome these problems.
Key Words: Efficiency, Microfinance, Data Envelopment Analysis, Tobit Model.
Introduction
In a developing economy like Pakistan, people are generally trapped in the vicious circle of poverty. Low
income result in very low savings due the high percentage of income spent on consumption expenditures.
Therefore access to the credit plays an important part to take these people out of this trap. Commercial banks are
usually quite reluctant to give loans to such people owing to little amount of credit demanded. Therefore
microfinance institutions fulfill the credit requirements of the poor people. Micro credit may have a dual
influence on the performance of a micro enterprise. First if this loan is utilized properly on the business at the
right time, it may increase not only its efficiency but it would also increase the income of the entrepreneur
significantly. Secondly if this loan is misused for either for non productive purpose or it at wrong time due to the
late approval of the loan, it may have negative impact on the income, productivity and the efficiency of an
entrepreneur. This study focuses not only on the beneficiaries of microfinance institutions but also on those
micro level business men who neither take loan from commercial banks due to either lack of collateral or small
amount of loan demanded nor do they benefit from microfinance institutions due to insufficient amount offered
by MFI, return of loan in installments and high interest rate. In Pakistan commercial banks generally do not give
loan of an amount less than one to 1.5 million. Whereas MFI offer an amount maximum up to 150000. Therefore
people asking for an amount from 150000 to one million can not benefit from either of the two financial systems.
Micro finance can be defined as the provision of different financial services at the larger level like insurance,
money transfer and credit to the households having low income (ADB 2000). Low income can be defined
differently on the basis of area and the country. Microfinance is the availability of different financial services
like credit, saving, money transfer, payment services and insurance to the low income people and women in the
long run (Zafar et al. 2009). Microfinance can also be defined as provision of loans, insurance and money
transfer facility to the micro and small level business or where the commercial banks face heavy transaction cost.
In his presentation by Anjum Ahmad (SMEDA Pakistan 2009) described the definition of micro, small and
medium enterprises according to the different institution. The definition of Micro, Small and medium business
by Small and Medium Enterprise Development Authority (SMEDA) is the most comprehensive. Micro level
business has been defined as an enterprise that has less than 10 employs and has productive assets of less than 2
million. Small scale entrepreneur has 10 to 35 employs and average value of stock of 2 to 20 million. While
medium size firm hire less than 100 employees and have productive assets of less than 4 million Pakistani Rupee.
The case study for this research is Faisalabad District. Faisalabad is the 3rd
largest city of Pakistan after Karachi
and Lahore in terms of population while it is the 2nd
most congested city after Karachi according to the 1998
census. According to the recent estimates, population of the city Faisalabad is about 4 million twice as high as it
was in 1998 census. According to the 1998 census population of city Faisalabad was growing by 21% per year.
2. European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.5, No.18, 2013
168
The reason of choosing Faisalabad is the rapid economic growth in the city during the last few decades.
Objectives of the study
To find the efficiency scores of microfinance borrowers and non-borrowers.
To find the determinants of the efficiency scores.
In the end to give such policy recommendations and suggestions, that may lead to efficient use of micro finance
and to analyze the performance of microfinance institutions.
Review of Literature
Bhasin and Akpalu, (2001) explored the efficiency of wood-processors, tailors and hair dressers. Major factors
that affected their efficiency were found to be age, experience of the business, education level, training programs
and credit. Credit participation had a positive and the significant impact on the efficiency of all the three
categories of micro entrepreneurs. Trillo, et al. (2005) used Stochastic Frontier Production function approach to
find the inefficiencies of different micro enterprises. Entrepreneurs who took loan from banks or through formal
way were found to be more efficient than those who relied on their family members or friends etc through
informal way. One of the reason behind was the screening policy by the banks. Nghiem et al. (2006) Used Data
Envelopment Analysis to check the efficiency of 46 microfinance schemes that they surveyed in his research.
They used poverty approach rather than production approach to see the efficiency of microfinance. Average
technical efficiency score was recorded at 80% of the schemes. Age and the location of the schemes were found
to have the significant impact on the efficiency of the microfinance using 2nd
stage regression. Akanni, (2007)
investigated the effect of microfinance on small scale Poultry business in South West Nigeria. Out of the total
sample, 29% took loan from co-operative societies. Education level, business experience and number of birds in
the farm were positive and significant. Funds intensity was highest for usage of inputs while it was lowest for the
business experience. Shirazi and Khan (2009) described the role of PPAF and microfinance in reducing poverty.
It was concluded that micro credit cut down the Poverty by 3.05 percent. Adams and Bartholomew, (2010)
studied the role of microfinance in reducing poverty. A sample of 100 microfinance borrowers was taken of
maize farmers. The impact of microfinance on socioeconomic well being was found to be quite minor due to
lack of entrepreneurial skills. Nudamatiya, et al. (2010) investigated the relationship between change in income
and micro credit. Regression coefficient of 0.35 showed positive and significant relationship between
microfinance and change in income. Saleem and Jan (2011) stressed the need to adopt new technology in the
agriculture sector that requires credit. Cobb-Douglass linear regression was used on the data from 1990 to 2008.
credit used for cede, fertilizer, pesticides, irrigation and tractors were strongly related with the agriculture gross
domestic product. Impact of credit on agriculture production was found to be more than 80%. Thereby it was
concluded that credit access had a very significant role in increasing agriculture productivity. Oni, et al. (2011)
explored the determinants of the efficiency of poultry farmers using micro credit in one of the states of Nigeria
applying SFA technique on a sample of 115. micro credit was found to have a positive and the significant impact
on the technical efficiency. Ayaz, et al. (2011) found the efficiency scores of the different farmers in district
Faisalabad using the Data Envelopment Analysis technique. Mean efficiency of the over all farmers was 0.78 or
22% inefficiency. efficiency scores were then regressed by different farm related variables through Tobit
regression. Credit access was a significant positive factor to increase the efficiency score. Akram and Husain,
(2011) explored the contribution being made by microfinance to remove poverty in district Okara. Microfinance
was found to have a positive and the significant impact on the level of income. Sumelius, et al. (2011) computed
the profit efficiency of different rice farmers in Bangladesh. Cob-dugless stochastic profit function frontier
analysis was carried out to find the profit efficiency and loss in profit using the data of 360 farms in the growing
season of 2008 to 09. It was found that the profit efficiency of the microfinance borrowers was 68 percent, where
as for the non borrowers it was 52 percent. That showed significant improvement in the efficiency due to the
borrowing. Islam et al. (2011) explored the efficiency of the beneficiaries and non beneficiaries of microfinance
of the Rice farmers in Bangladesh using DEA approach. Mean score for the technical efficiency was recorded at
72%, for Allocative it was 66% and for Economic efficiency it was 46%. Efficiency scores of microfinance
borrower and non borrowers were considerably different from each other. Alex, (2012) assessed the role of
microfinance to reduce the poverty using both primary and the secondary data. Microfinance had a positive
impact to alleviate poverty. Akpalu, et al. (2012) explored that mean technical efficiency was found to be 40%
indicating that output could easily be doubled or in excess of doubled without make using of further inputs.
Efficiency of the enterprises increased by 11% by using microfinance.
Data and Methodology
Data Description: Data was collected from different micro finance beneficiaries and non beneficiaries by the
help of a questionnaire. From the non-borrowers same questionnaire was used excluding the questions related to
loan. Micro level shopkeepers whose average value of stocks are less than 2 million according to the definition
of SMEDA were chosen for this study. A sample of 122 micro level shop keepers using Simple Random
Sampling Technique including 43 borrowers and 79 non-borrowers.
3. European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.5, No.18, 2013
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Variables of the Econometric Analysis
Variables of the 1st
Stage: To find the efficiency score of each trader profits per month have been taken as the
output where as cost on different factors of production have been taken as the inputs. Cost has been taken due to
two reasons, firstly because it represents the quality of input and secondly to remove the heterogeneity in the
data. One output and five inputs have been taken to apply DEA. Net profit of each trader has been taken after
subtracting interest from it and has been used as the output. Cost on labour has been taken in Rupees per month.
If the shopkeeper is himself running the shop, then opportunity cost equivalent to 8000 has been added in cost of
labour. Interest of the capital that has been borrowed per month plus the opportunity cost of the capital that is
owned has been taken as the 2nd
input. Opportunity cost of the capital has been calculated by taking 8% deposit
rate offered by the commercial banks on average. Rent of the building has been taken as the 3rd
input. If the
trader has his own shop then opportunity cost has been taken equivalent to market rent. Cost on utility bills has
been taken as the forth input. Traders usually face electricity bills only. Cost on payment to the supplier has been
taken as the 5th
input. It has been measured by taking the average value of the stocks. Transportation cost has
been summed up in it as the usually the producer supplies the product by own and includes the transportation
cost in the price of that product. Those who bear transportation cost then selves, their cost has been summed up
in payment to the supplier.
Variables of the Second Stage, Regression: Different variables were kept as the regressors in the 2nd
stage to
find the determinants of efficiency. House ownership, shop ownership, type of customer, scale of the business
have also been quantified by creating dummy variable. However education and business experience have been
taken in years.
Hypothesis: The main hypothesis of this research is to see whether borrowing is a significant determinant of
efficiency. So the null hypothesis is that borrowing has an insignificant impact on the efficiency against the
alternative that efficiency is being significantly determined by the credit.
Approaches of measuring efficiency: Berger and Humphey describe two approaches, Parametric and Non-
parametric approach to measure efficiency. Parametric approach requires functional form and it assumes
disturbance term. It is calculated by Stochastic Frontier Analysis. Non-parametric approach requires no
functional form and it does not assume any disturbance term. It is calculated by Data Envelopment Analysis.
Data envelopment analysis: Term of Data Envelopment Analysis was first introduced by Charnes et al 1978.
But its concept has been taken from the work carried out by Forrell 1957. It is a non parametric technique which
gives productive efficiency scores of each producer or entrepreneur. Non-parametric technique does not assume
any specific shape of Frontier curve but on the other hand it does not estimate any relationship or the equation
between input and output. It may b used to compare the efficiency across producers or entrepreneurs. There are
mainly two types of DEA, one which is based on the CRS (Constant Return to Scale) and the other which is
based on VRS (Variable Return to Scale). Data Envelopment Analysis can be run by either cost minimizing
method or output maximizing method. In cost minimizing method, output is fixed and on that output, cost is
minimized. Where as in output maximizing method cost is kept fixed and output is maximized.
Parametric technique: Parametric technique requires the functional form. Stochastic Frontier Analysis is used
to measure the efficiency and inefficiency scores by assigning the functional form. SFA gives both efficiency
scores in the 1st
stage as well as 2nd
stage parametric equation.
Tobit Regression: 2nd
stage regression was used in this study keeping efficiency scores as the depended variable.
As the efficiency scores take the values from 0 to 1. So it is left censored at 0 and right censored at 1. So
applying OLS on such model may lead to biased results. Therefore Tobit model is best fit on such functional
form. Tobit model was first introduced by James Tobin in 1958 which describes the relationship between non
negative depended variable and explanatory variables or vectors. Tobit model assumes error term to be normally
distributed. However E-views provides further option of the error term to be either logistic or skewed in nature
of the censored regression. Applying OLS on an equation having censored depended variable gives inconsistent
estimators. Such slope coefficients estimated by OLS are downward biased. Whereas intercept obtained by OLS
is upward biased. It has been proven by Amemiya (1973) that Maximum Likelihood estimators proposed by
James Tobin are quite consistent. Following equations were estimated by using Tobit Regression.
0 1 2 3 4 5 6 7( ) ( ) ( ) ( ) ( ) ( ) ( )VRSTE Cred TCus BExp Edu BOwn HOwn APCβ β β β β β β β µ= + + + + + + + +
0 1 2 3 4 5 6 7( ) ( ) ( ) ( ) ( ) ( ) ( )CRSTE Cred TCus BExp Edu BOwn HOwn APCβ β β β β β β β µ= + + + + + + + +
VRSTE = Variable Returns to Scale Technical Efficiency.
CRSTE = Constant Returns to Scale Technical Efficiency.
BOwn = ownership of business premises. HOwn ownership of house.
BExp = Business Experience in years. Credit = Credit Access.
4. European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
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TCus = type of customer. APC = Average Propensity to Consume.
Results and Discussion
Descriptive Analysis: Just 5 traders out of total 122 traders were running their business on partnership and the
rest were working on sole, showing a very low percentage of the traders working under partnership. Whereas
83.6% of the traders were retailers while the rest were wholesalers. A large majority of the 83 shopkeepers were
working in a rented shop while only 39 had their own shop. However about 85% respondents had their own
house.
Table 1: Information of the Respondents
Demographic Factors Minimum Maximum Average Std Deviation
Age 20 64 42.11 9.94
Education 5 16 9.85 2.99
Family Size 2 11 6.54 2.03
Number of Earners 1 4 1.72 0.80
Income 10000 140000 60400 40212.07
APC 0.3733 1.00 0.77 0.15
Business Experience 1 38 14.89 7.75
Total Experience 1 40 16.26 8.52
Average age of the shopkeepers were found to be about 42 years. Most of the traders were under matric. Family
size was found to be 6.54 on average. Whereas most of the respondents had 1 to 2 earners in their family as
shone by the average and it’s standard deviation. Standard deviation of family income and Average Propensity to
Consume has been found quite high. Experience of the traders whether it was current business related or total
business experience have wide range.
Data Envelopment Analysis: Data Envelopment Analysis technique was applied by taking 122 micro
entrepreneurs sample whose average stocks were 100000 to maximum up to about 2 million. Forty three of them
were borrowers where as 79 were non-borrowers. Monthly profits were taken as out put and monthly cost on
labour, building rent, utility bills, interest of capital and payment to the supplier were taken as inputs. Output
oriented technique was applied. As the objective of the borrowers is to maximize the profits.
Table 2: Results of DEA
Descriptive Statistics CRSTE VRSTE SE
Mean 0.6402 0.7191 0.8976
Std. Deviation 0.2187 0.2274 0.1358
Minimum 0.138 0.138 0.3
Maximum 1 1 1
As the above table shows that Constant Return to Scale Technical Efficiency (CRSTE) of micro level
shopkeepers was found to be 0.6402 or 64.02%. in other words 0.3598 or 35.98% inefficiency. Where as
according to Variable Return to Scale Technical Efficiency (VRSTE) is 0.7191 or 71.91%, which reflects that
the shopkeepers are 0.2909 or 29.09% inefficient. How ever scale efficiency is much higher than the other two
and stands at 0.8976 or 89.76%. it is a notable point that range from minimum to maximum efficiency is same
for Constant Return and Variable Return to Scale.
Table 3: Distribution of the Returns
Operating Under DRS CRS IRS Total
Frequency 14 28 80 122
Percentage 11.48 22.96 65.57 100
A large majority of the shopkeepers are working under increasing return to scale. Who therefore need to
mobilize its resources to maximize its profits. 23% of the shopkeepers were operating under Constant Return to
Scale or in other words in the 2nd
stage. Very few of the traders were over utilizing their resources. Traders
working under Decreasing Return to Scale were about 11.48%.
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Tobit Regression
Table 4: Impact of Different Demographic and Economic Factors on VRSTE.
Above table shows that microfinance borrowers were found to be 0.22 more efficient than non-borrowers as
shone by the coefficient of credit in the above table. And it is highly significant even at 1% level of significance.
shopkeepers whose customer are general public were 0.04 more efficient than those whose customer were
retailers but insignificantly even at 10% level of significance. business experience was found to be significant
factor to determine the efficiency at 1% significance level. The reason behind is that traders of younger age were
more efficient than the older as the younger traders are more educated, therefore they are more efficient.
Education is positively related with efficiency and it is significant at 10% level of significance. shopkeepers
having their own shop were insignificantly more efficient than the shopkeepers having rented shop. However
shopkeepers having their own house were far more efficient and found to be 0.19 more efficient than
shopkeepers having rented house at even 1% level of significance. Average Propensity to Consume (APC)
obtained by dividing the domestic expenditures by their total income, was also turned to be a significant
determinant of Efficiency. APC has a negative impact on the Variable Returns to Scale Technical Efficiency
(VRSTE) and it is significant at 10, 5 and 1% level of significance. reason behind is that with an increasing
prices traders have to invest more and more in their shops. So the shopkeepers having higher APC investment
less on their business, as a consequence their profits decrease.
Table 5: Impact of Different Demographic and Economic Factors on CRSTE.
Dependent Variable: CRSTE
Method: ML - Censored Logistic (Quadratic hill climbing)
Variable Coefficient Std. Error z-Statistic Prob.
CREDIT 0.345123 0.043376 7.95646 0
TCus 0.042479 0.048844 0.869678 0.3845
LOG(BEXP) -0.07788 0.029751 -2.617771 0.0089
BOwn 0.075918 0.035281 2.151821 0.0314
LOG(EMPLOY) -0.033583 0.051713 -0.649408 0.5161
LOG(EDU) 0.11328 0.057004 1.987241 0.0469
HOwn 0.102662 0.045414 2.260554 0.0238
APC -0.457943 0.130367 -3.512734 0.0004
C 0.696853 0.209944 3.319226 0.0009
Keeping Constant Return to Scale Technical Efficiency as the depended variable, it was found that results
remained very much the same as discussed in the above table keeping VRSTE as a depended variable. Sign of
the variables were exactly the same as in the earlier table, however ownership of business premises (BOwn)
turned out to be significant in this model. Where as Number of labour (proxy for size of business) turned out to
be insignificant in this model.
Conclusion and suggestion
Dependent Variable: VRSTE
Method: ML - Censored Logistic (Quadratic hill climbing)
Variable Coefficient Std. Error z-Statistic Prob.
CREDIT 0.22518 0.05601 4.020655 1E-04
TCus 0.046637 0.06097 0.764947 0.444
LOG(BExp) -0.12632 0.03955 -3.19403 0.001
BOwn 0.055121 0.04462 1.235224 0.217
LOG(EMPLOY) -0.24049 0.06651 -3.61572 3E-04
LOG(EDU) 0.134719 0.07287 1.848832 0.065
HOwn 0.198051 0.05933 3.338027 8E-04
APC -0.3083 0.17225 -1.78982 0.074
C 0.885697 0.27875 3.177432 0.002
6. European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
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Main Findings: Comparing the efficiencies of borrowers and non-borrowers among micro entrepreneurs by
introducing dummy variable in the 2nd
stage, censored regression, it was concluded that borrowers were Far
more efficient than non borrowers. As after the inclusion of loan in their business micro entrepreneurs became
more efficient and reached in the Constant Returns to Scale situation. Average Propensity to Consume (APC)
was negatively and significantly related with efficiency. Among borrowers higher APC forces to make more
fungible use of the credit. Higher APC among non-borrowers results in low savings and ultimately due to higher
inflation during last few years, worth of the capital invested in the business reduces. Education was found to be a
positive and a significant determinant of efficiency. as entrepreneurs having higher education make better use of
the resources available to them. Business experience had a negative impact on the efficiency. reason behind is
that shopkeepers of younger age are more educated therefore make better use of the resources.
Performance of Microfinance Institution: Performance of the microfinance institutions has been found to be
quite unsatisfactory. Traders who are infect interested to take the loan to improve the efficiency of their business
and interested to take loan from any of the microfinance institution after being rejected by the commercial banks
due to insufficient amount demanded for. Whereas microfinance institutions provide a very little amount of loan
of less than 100000 to 150000. whereas commercial banks fixed the lower limit down to 1 million to one and
half million due to high transaction cost. So the businessmen interested to take the loan from 200000 to 1 million
are deprived of the loan or have no access to the credit. Interest rate of the microfinance institutions is usually
quite high and more than the commercial banks due to the high risk involved. Contradictory to the commercial
banks, loan is returned in installments to the microfinance institutions. Which again reduces loan efficiency. by
the help of an example, it may be realized that loan taking from MFI is not useful for trading business.
A shopkeeper who has an average stock of 300000 in his shop, wants to invest 100000 more in the business. At
this stage of the business, he would earn 3 to 4 thousand extra per month. If he takes the loan from any of the
Microfinance institution at the interest rate of 20% at the start of the year . he would get profit as shone by the
following table.
Table 6: Efficiency of Loan Returned in Installments
Month Loan Amount installment amount returned Profit by 3% Profit by 4% profit by 5%
1st
100000 10000 10000 3000 4000 5000
2nd 90000 10000 20000 2700 3600 4500
3rd 80000 10000 30000 2400 3200 4000
4th
70000 10000 40000 2100 2800 3500
5th
60000 10000 50000 1800 2400 3000
6th
50000 10000 60000 1500 2000 2500
7th
40000 10000 70000 1200 1600 2000
8th
30000 10000 80000 900 1200 1500
9th
20000 10000 90000 600 800 1000
10th 10000 10000 100000 300 400 500
11th 0 10000 110000
12th 10000 120000
total 120000 16500 22000 27500
As the above table shows that if the trader gets the profit by 3%, he would earn Rs 16500, whereas he has to pay
Rs 20000 in the form of interest. So the net profit would be Rs -3500, which means he has to face loss. Whereas
he would get benefit of Rs 2 thousand and 75 hundred if he earns the profit by 4% and 5% respectively. . so the
loan taken from any microfinance institution will only be beneficial if the trader is sure to get profit by more than
4% from that loan amount of Rs 100000. if that same loan is returned in a one go after a year with the interest.
The same trader would earn Rs 36000 in a year by a profit of 3% only. So in this way returning loan in 1 go is
far more beneficial than returning it in installments. Microfinance institutions do not inspect or look after the
business of the borrowers like the commercial banks to confirm whether that loan amount is being properly used
or not in the business. Which allows the borrower to make fungible use of the credit. So therefore high
percentage of loans taken from MFI’s are used for non productive purpose.
Policy Recommendations: Number of policy measures can be taken to increase economic activities.
Microfinance institutions need to increase upper loan limit up to about 500000. whereas commercial banks
should give loans from 500000 to 1 million on providing personal guarantee. Recovery of loans given on
personal guarantee may be ensured by making laws of punishment etc. Return of loans should be in one go
rather than installments. Interest rate should be tried to decrease. There should be workshops arranged for the
borrowers to make best use of the credit and resources. Proper inspection by the Microfinance Institutions and
the commercial banks is needed to be done to ensure best use of the credit. As it is evident by the results that
7. European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.5, No.18, 2013
173
education is positively related with the efficiency of the entrepreneurs, therefore it is recommended to promote
not only the general education but also the business related education and the short courses.
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