Hindrances to Microfinancing: A Nigerian Case Study (Published)
Traditionally, commercial banks lend money to large, credit-worthy corporations and avoid doing business with small and medium enterprises due to the associated risks and costs. These small and medium enterprises depend on microfinance banks to obtain loans for their businesses, but for some reasons, some of these businesses do not approach microfinance banks for loans. This research investigates reasons why some businesses do not apply for loans from microfinance banks even though they need funds for the efficient running of their business. Results show that lack of collateral, ignorance of businesses about the existence of microfinance banks, and high interest rates are the main reasons that are hindering businesses in applying for loans from microfinance banks. Microfinance banks need to reach out to economically active poor businesses that cannot obtain loans from commercial banks or other financial institution.
Keywords: Business, Enterprise, Entrepreneur, Loans, Microfinance, Nigeria
Islamic Microfinance System and Poverty Alleviation (Published)
Islamic microfinance is a finance system that follows the teachings of Shariah laws; this is a financial system that does not attract interest and promotes the welfare of its members while following the ethical business practices. This is a concept that is fast gaining prominence as a means of alleviating poverty especially in developing countries. In this paper, it has been found out that Islamic finance plays an important role in social economic development of its members without charging interest on the members. Furthermore, Islamic finance offers different ethical instruments and schemes that can be used for the purposes of microfinance. In Islamic finance, investors are allowed to determine the nature of investments that are done using their money. This paper is therefore important in understanding the concept of Islamic finance in alleviating poverty. It can be very useful for banks and financial institutions who have Muslims as part of their client base.
Keywords: Islamic System, Microfinance, Poverty
SOCIO-ECONOMIC DETERMINANTS OF ERITREA’S SAVINGS AND MICRO CREDIT PROGRAM LOAN REPAYMENT PERFORMANCE: A CASE OF THE DEKEMHARE SUZ-ZONE (Published)
The Savings and Micro Credit Program of Eritrea was established to provide financial services to the poor and lower income individuals to enhance their business activities and alleviate poverty level. The study analyzed the socio-economic factors that affect the institution’s loan repayment performance and a sample of 140 beneficiaries was fixed from the Dekemhare Sub-Zone using the Stratified Sampling technique. A structured questionnaire was used to collect the primary data and descriptive statistics and the probit model were employed to analyze the data. Results of the regression analysis revealed that the level of education, loan amount and loan category have insignificant effect on the probability of the SMCP loan repayment. On the other hand age, gender, type of business and credit experience are significant determinants where age and type of business have negative relationship and gender and credit experience have positive relationship with the loan repayment probability
Keywords: Eritrea, Loan Repayment Performance, Microcredit, Microfinance, Probit, Savings and Micro Credit Program