Microfinance institutions in Bangladesh: achievements and challenges

Abstract

PurposeThe purpose of this paper is to review the Bangladesh experience with microfinance popularly known as microcredit. The success of microfinance in Bangladesh has generated immense interest in other countries of the world. The paper emphasizes the role of autonomous national microfinance fund and analyzes the efficiency of microfinance delivery mechanisms in Bangladesh. The paper examines the new realities/challenges faced by the microfinance movement in Bangladesh.Design/methodology/approachThe paper provides an overview of the evolution of microfinance institutions (MFIs), their coverage of borrowers and activities funded in Bangladesh. Results of some independent impact assessment studies have been presented. Data from various institutions of Bangladesh and from some surveys conducted in Bangladesh are used.FindingsThe paper shows how the concept of microfinance, the MFI and various modalities of delivery of financial services to the poor have contributed to the development efforts of Bangladesh where a large number of people live below the poverty line.Research limitations/implicationsThe paper is based on data and information of a limited time period and covering some selected issues. Further studies may be carried out on second generation issues and problems based on more available data.Practical implicationsThe paper brings out the implications of microfinance as an effective tool for development and poverty alleviation.Originality/valueThe paper points out the practical aspects to build up a robust and sustainable system for increasing the access of the poor to financial services.

Educational Development of NGO Beneficiaries in Bangladesh: A Disjunction between Programmes and Implementation

“…Nevertheless, the study finding was expected and supported by several previous studies where the impact of micro-credit programme of Bangladeshi NGOs was focused as partial and contested (Hulme, 2000;Ullah & Routray, 2007;Ahmed, 2009). Though, the insignificant finding is opposite to Becker's (1964) human capital theory, several research findings have found influential roles of micro-credit on beneficiaries' education development such as children schooling, school enrolment (BIDS), girls' schooling (Pitt et al, 2003), and school enrolment rate and attitude to education.…”

“…This is also supported by a strand of researches on impact assessment study on micro-credit (Pitt, Khandker, Chowdhury, & Millimet, 2003;Rahman, 1996; as cited in Ahmed, 2009). Khandaker noted that micro-credit programmes promote investment in human capital and raise awareness of reproductive health issues; he also found positive economic impact on clients in terms of income growth and reduced vulnerability (Khandker, 1999 Ahmed, 2009) and the big NGOs reach only 10-20 per cent of the landless households (Zaman, 1996), therefore, the impact of micro-credit programmes on the socio-economic development is partial and contested (Hulme, 2000).…”

Women Empowerment Through Microfinance: Empirical Evidence from Ghana

“…On the other hand, prior researches have indicated that there exits inherent problems limiting women's accessibility to microfinance services [21,22]. Paramount among those problems identified in literature are: high interest rate on loans; collateral required for loans and cumbersome service application procedures [23][24][25][26].…”

Big Challenges by a Small Microfinance Institution- A Case Study of SafeSave Bangladesh from the Customer Satisfaction and ICT Introduction Perspective

“…(1996); Pitt and Khandker (1998); Schuler and Hashemi (1994) ;Schuler, Hashemi, and Riley (1997); Schuler, Hashemi, and Badal (1998)). With Bangladesh at the center of the research, Ahmed (2009) pointed out the achievements and challenges of MFIs in Bangladesh and highlighted the issues such as the present inefficient mechanism of channeling fund, high rate of fund, target wider group, widening new financial technologies, ensuring the good governance, monitoring purpose of loan and necessity of large loan size on the industry level.…”

“…In addition, concrete variables in customer satisfaction analysis in MF are developed by previous researchers; interest on loan (Lapenu, Pierret 2006), loan disbursement time (Murray, Lynch 2003), time flexibility on installment (Wenham 2004), saving not as a collateral (Menkhoff, Neuberger, Rungruxsirivorn 2012), monitoring loan purposes (Ahmed, 2009), understanding terms and conditions, pleasant staff behavior (Othman, Owen 2001), and mobile money transfer (Au, Kauffman 2008). But they are too fragmented to capture the whole scenario of MF business in Bangladesh.…”