Understanding Household's Access to Loans from Microfinance Institutions in Delhi Slums
DOI:
https://doi.org/10.5281/zenodo.13340505Keywords:
microfinance, poverty alleviation, informal credit, financial inclusion, socioeconomic determinantsAbstract
The provision of credit is essential for poverty alleviation, but formal financial institutions often exclude the poor due to stringent criteria and collateral requirements, leading them to rely on informal lenders despite high interest rates. Microfinance aims to fill this gap by offering small loans to those lacking access to formal credit, promoting investment in microbusinesses and economic growth. However, microfinance often fails to reach the poorest, serving mainly those near the poverty line. This study takes up this issue and aims to identify the socio-economic factors that determine access to microfinance institution loans among 368 households in Delhi slums. The study reveals that MFIs aim toward poverty alleviation by providing loans to the poorer sections of society. They provide loans to “self-employed” households for investments in micro ventures which helps them in raising their income and living standards. Also, the level of education of the household's head and the age of a women respondent have a positive influence on accessing loans from MFIs.
Downloads
References
Adjei, J. K., & Arun, T. (2009). Microfinance programmes and the poor: Whom are they reaching? Evidence from Ghana. Brooks World Poverty Institute Working Paper Series, 7209, 265-291.
Amin, S., Rai, A. S., & Topa, G. (2003). Does microcredit reach the poor and vulnerable? Evidence from northern Bangladesh. Journal of Development Economics, 70(1), 59-82.
Addo, C.A., Mockshell, J., Zeller, M., Siddig, K., & Egyir, I. S. (2017). Agricultural credit provision: What really determines farmers’ participation and credit rationing? Agricultural Finance Review, 77(2), 239-256.
Ashraf, M. A., & Ratan, S. R. A. (2009). The Frontiers of Microcredit Programs in Bangladesh: An Empirical Review. ABAC Journal, 29(3).
Atieno, R. (2001). Formal and informal institutions’ lending policies and access to credit by small-scale enterprises in Kenya: An empirical assessment.
Baiyegunhi, L. J. S., Fraser, G. C. G., & Darroch, M. A. G. (2010). Credit constraints and household welfare in the Eastern Cape Province, South Africa. African Journal of Agricultural Research, 5(16), 2243-2252.
Bakhshoodeh, M., & Karami, A. (2008). Determinants of poor accessibility to microcredits in rural Iran. In: International Conference on Applied Economics, pp. 67-71.
Bauchet, J., Marshall, C., Starita, L., Thomas, J., & Yalouris, A. (2011). Latest findings from randomized evaluations of microfinance.
Bhuiya, M. M. M., Khanam, R., Rahman, M. M., & Nghiem, H. S. (2016). Impact of microfinance on household income and consumption in Bangladesh: empirical evidence from a quasi-experimental survey. The Journal of Developing Areas, 50(3), 305-318
Camara, N., Pena, X., & Tuesta, D. (2014). Factors that matter for financial inclusion: Evidence from Peru No. 1409.
Coleman, B. E. (2006). Microfinance in Northeast Thailand: Who benefits and how much?. World development, 34(9), 1612-1638.
Conning, Jonathan. (2001). Mixing and matching loans: Complementarity and competition amongst lenders in a rural credit market in Chile. Available at: http://econ.hunter.cuny.edu/ ~conning/papers/Mixing_0801.pdf (accessed July 1, 2009).
Datta, D. (2004). Microcredit in rural Bangladesh: is it reaching the poorest? Journal of Microfinance/ESR Review, 6(1), 5.
Develtere, P., & Huybrechts, A. (2002). Evidence on the social and economic impact of Grameen Bank and BRAC on the poor in Bangladesh. Research Paper. Hoger Instituut Voor De Arbeid. Katholieke Universiteit Leuven.
Evans, T. G., Adams, A. M., Mohammed, R., & Norris, A. H. (1999). Demystifying nonparticipation in microcredit: A population-based analysis. World Development, 27(2), 419-430.
Gaitho, N. W. (2013). Role of credit reference bureaus on credit access in Kenya: A survey of commercial banks in Kenya. European Scientific Journal, 9(13).
Hadia Hina, Geoff Lightfoot and David Harvie, (2014). Microfinance, “Sustainable Entrepreneurship and the Funding Gap”, School of Management. The University of Leicester.
Johnston Jr, D., & Morduch, J. (2008). The unbanked: Evidence from Indonesia. The World Bank Economic Review, 22(3), 517-537.
Kacem, S. B. A., & Zouari, S. G. (2013). The determinants of access to financial services for micro-credit associations: Application on Tunisian case. Journal of Business Management and Economics, 4(2), 031-046.
Kereta, B. B. (2007, November). Outreach and financial performance analysis of microfinance institutions in Ethiopia. In: African Economic Conference, Addis Ababa.
Kumari, U. (2017). Role of microfinance in promoting financial inclusion in urban poor of Kolkata. International Journal of Management, IT and Engineering, 7(2), 193-201.
Latif, W. U., Ullah, S., Ahmad, W., Hussain, S., Sultan, M. U., Jafar, R. M. S., & Wang, L. P. (2017). Supply-side vs demand-side factors facing rural households’ accessibility to microcredit in Pakistan. DEStech Transactions on Computer Science and Engineering, (cmee).
Li, X., Gan, C. and Hu, B., (2011b). The welfare impact of microcredit on rural households in China. The Journal of Socio-Economics, 40 (4), 404-411.
Microfinance India Publication. (2006). A promise to pay the bearer, an exploration of the potential for urban microfinance in India.
Montgomery, H. (2006). 8 Serving the poorest of the poor: the poverty impact of the Khushhali Bank’s microfinance lending in Pakistan. Poverty strategies in Asia: A growth plus approach, 222.
Montgomery, H. and Weiss, J., (2005), Great Expectations: Microfinance and Poverty Reduction in Asia and Latin America. ADB Institute, Research Paper Series No. 63.
Morduch, J. (1998). Does microfinance really help the poor? New evidence from flagship programs in Bangladesh. Research Program in Development Studies, Woodrow School of Public and International Affairs.
Navajas, S., Schreiner, M., Meyer, R. L., Gonzalez-Vega, C., & Rodriguez-Meza, J. (2000). Microcredit and the Poorest of the Poor: Theory and evidence from Bolivia. World development, 28(2), 333-346.
Nuryartono, N. (2007). Credit rationing of farm households and agricultural production: Empirical evidence in the rural areas of Central Sulawesi, Indonesia. Journal Management & Agribusiness, 4(1), 15-21.
Okurut, F. N. (2006). Access to credit by the poor in South Africa: Evidence from household survey data 1995 and 2000. Stellenbosch: University of Stellenbosch.
Peprah, J. A. (2012). Access to micro-credit well-being among women entrepreneurs in the Mfantsiman Municipality of Ghana. International Journal of Finance & Banking Studies, 1(1), 1-14.
Pitt, M. M., & Khandker, S. R. (1996). Household and intrahousehold impact of the Grameen Bank and similar targeted credit programs in Bangladesh. The World Bank.
Robinson, M. (2002). The microfinance revolution: Lessons from Indonesia. The World Bank.
Sharif, I. (1997). Poverty and finance in Bangladesh: A new policy agenda. Who needs credit, 61 Sharif, I. (Eds.), Who Needs Credit?. Poverty and Finance in Bangladesh. Dhaka: The University Press.
Tang, S., & Guo, S. (2017, July). Formal and informal credit markets and rural credit demand in China. 4th International Conference on Industrial Economics System and Industrial Security Engineering (IEIS) (pp. 1-7). IEEE.
Umoh, G. S. (2006). Empirical investigation of access to micro-credit in an emerging economy: Evidence from Nigeria. Journal of African Business, 7(1-2), 89-117.
Von Pischke, J. D. (1995, March). Managing the trade-off between outreach and sustainability by measuring the financial performance of microenterprise lenders. In: Conference on Finance against Poverty: Challenges and Advances in Banking with the Poor, University of Reading, UK.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Dr. Vandana Sethi
This work is licensed under a Creative Commons Attribution 4.0 International License.
