Econ 465 march 5 2009 catherine nguyen samuel oh
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ECON 465 March 5, 2009 Catherine Nguyen Samuel Oh. Microfinance. Overview. What is microfinance? Origins Institutions Jobs Benefits Examples Current Conditions Future Prospects Concerns. Chipa in Caacupé, Paraguay. What is Microfinance?.

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Microfinance

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Econ 465 march 5 2009 catherine nguyen samuel oh

ECON 465

March 5, 2009

Catherine Nguyen

Samuel Oh

Microfinance


Overview

Overview

  • What is microfinance?

  • Origins

  • Institutions

  • Jobs

  • Benefits

  • Examples

  • Current Conditions

  • Future Prospects

  • Concerns


Chipa in caacup paraguay

Chipa in Caacupé, Paraguay


What is microfinance

What is Microfinance?

  • Microfinance is defined as financial services for poor and low-income clients.

  • Microfinance is a movement that will help low income families have access to financial institutions.


Origins of microfinance

Origins of Microfinance

  • Microfinance clients are poor and have low-incomes.

  • Microfinance clients tend to be below the poverty line.

  • Many households are without financial access.


Institutions

Institutions

  • Most microfinance intuitions started as not-for-profit organizations.


Active institutions in latin america

Active Institutions in Latin America

  • ACCION Communitaria del Peru (ACP)

  • ACODEP, Nicaragua

  • ACTUAR/Tolima, Colombia

  • ADMIC National, A.C., Mexico

  • Agencia de Desarollo Economico Local de Morazan, El Salvador

  • Asociacion Benefica PRISMA, Peru

  • Asociacion de Mujeres Campesinas Salvadorenas, El Salvador


Jobs created by acci n border lending 1994 2005

Jobs Created by Acción Border Lending 1994 - 2005


Benefits of microfinancing

Benefits of Microfinancing

  • Microfinance can provide a range of benefits that poor households highly value.

  • Microcredit improves lives.

  • Other microfinance services include…


Shopkeeper in le n nicaragua

Shopkeeper in León, Nicaragua


Current microfinance environment

Current Microfinance Environment

  • Report from Economist Intelligence Unit, Oct 2008.

  • Overall portfolio value increase since 2001: from $1.19 bn to $9.25 bn.

  • 34% growth/year.


Future of microfinancing

Future of Microfinancing

  • Bright in current financial markets.

  • Typical repayment rates are 95-98%.

  • Not a solution to poverty.


Concerns of microfinancing

Concerns of Microfinancing

  • CompartamosBanco listed its shares for $1+ bn in 2007.

  • Legal Loan Shark?

  • Average interest rates 79%+.

  • Exploiting the financial ignorance of customers?


Response to concerns

Response to Concerns

  • Allowing open market to meet needs.

  • Microfinancing is labor-intensive.

  • Entice competitors and lower interest rates (115% seven years ago).

  • Financial Literacy courses to clients.


Questions

Questions?


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