1 / 16

For Profit vs. Non Profit Microfinance; How are the poor affected?

For Profit vs. Non Profit Microfinance; How are the poor affected?. Brian R. Weinberg College of Arts and Sciences Spanish Department, College of Business Administration FIREL Department, and Honors College Mentor: Dr. Gloria Cox - Dean of the Honors College

mikaia
Download Presentation

For Profit vs. Non Profit Microfinance; How are the poor affected?

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. For Profit vs. Non Profit Microfinance; How are the poor affected? Brian R. Weinberg College of Arts and Sciences Spanish Department, College of Business Administration FIREL Department, and Honors College Mentor: Dr. Gloria Cox - Dean of the Honors College Mentor: Dr. Michael McPherson - College of Arts and Sciences Economics Department

  2. Understanding Poverty • “2.8 billion of the world’s 6 billion people live on less than $2 per day. • 1.2 billion live on less than $1 per day (Anon. 2000/2001,3).” • The Global Village

  3. What is Microfinance? • “Microfinance is banking to the poor (Dr. Muhammad Yunus).” • “Microfinance is the supply of loans, savings, and other financial services to the poor (Kiva).” • 97% repayment rate 2006 Nobel Peace Prize recipient Dr. Muhammad Yunus

  4. Two Approaches of Microfinance • For Profit Approach • Higher interest rates to meet costs (up to 50%) • Stand alone entity (can raise capital easier to reach more people) • No research that says people cannot pay these rates (mission drift) • Non Profit Approach • Lower interest rates (20%) • Offer more services than credit (education, health) • Tendency to be dependent on donors

  5. Signing for a Microfinance loan

  6. My theory and hypothesis • Much research is done on determining which method is better. Both approaches are effective within their own scope and setting. • What are the advantages and disadvantages between the two approaches? • How are the poor affected with each approach?

  7. Thesis Methodology • Create 2 case studies of each microfinance approach using institutions within Mexico (Compartamos & AlSol). • Isolate as many variables as possible (age, size, average loan, number of borrowers, country). • Compare and Contrast these case studies in order to draw conclusions.

  8. How will I collect my data? • Industry leader interviews • Institution website • Existing research • Annual reports • Personal visit to Mexico

  9. Plans for the future • Meet with my mentors to discuss drafts. • Scholars Day Presentation (April 3, 2008). • Complete thesis by April 15, 2008.

  10. Acknowledgements • Dr. Susan Eve, Associate Dean of Honors College • Dr. Gloria Cox, Mentor/Dean of Honors College • Dr. McPherson College of Arts and Sciences Economics Department • HNRS Thesis Proposal 3500 class!

  11. References “Attacking Poverty: Opportunity, Empowerment, & Security.” World Bank’s World Development Report (2000/2001): 1-12. http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/0,,contentMDK:20194762~pagePK:148956~piPK:216618~theSitePK:336992,00.html (accessed October 12, 2007).  Flynn, Patrice. “Microfinance: The Newest Financial Technology of the Washington Consensus.” Challenge 50:2 (Spring 2007): 110-21. http://www.econlit/microfinance_washingtonconsensus.com (accessed September 18, 2007). Hermes, Neils and Robert Lensink.“The Empirics of Micro-finance: What do we know?” The Economic Journal 117:517 (Spring 2007): F1-F9. http://dq4wu5nl3d.search.serialssolutions.com/?genre=article&isbn=&issn=00130133&title=Economic+Journal&volume=117&issue=517&date=20070201&atitle=The+Empirics+of+Microfinance%3a+What+Do+We+Know%3f&aulast=Hermes%2c+Niels&spage=F1&sid=EBSCO:EconLit&pid=<authors>Hermes%2c+Niels</authors><ui>0913382</ui><date>20070201</date><db>EconLit</db (accessed September 18, 2007). Kiva Organization Web site. http://www.kiva.org/. Murdoch, Jonathan. “The Microfinance Promise.” Journal of Economic Literature 37 ( December 1999): 1569-1614. Murdoch, Jonathan. “The Microfinance Schism.” World Development 28 (2000): 617-629.   The Chiapas Project Web site. http://www.chiapas-project.org Yunus, Muhammad. Banker to the Poor. New York, NY: PublicAffairs, 2003.

More Related