Question 2

Shiyi Zhang, Jianing Huang, Rufei Fan, Mingtai Huang, Hao Wang, Siqi Long

Outline

 

1. The difference between microfinance and traditional banking.  

    (1) clients

    (2) products

2. The comparison between microfinance and other development               strategies

    (1) poverty lending and financial system

    (2) welfarism and institutionalism model

    (3) consumer lending

3. Conclusion

4. List of References

 

Characteristic of clients

1.formal documents

2.collateral              

3.gender                 

 

Different types of products

 

  • Short-term lending

 

  • Small amounts

 

  • Access to product

 Poverty lending and financial system

  • The poverty lending seeks to alleviate poverty of its targets through using foreign aid supplied subsidies.  

 

  • The financial system focuses on developing savings and lending services that meet the needs of low-income people and non-poor households

 

Welfarism microfinance

  • "poor coverage depth"
  •  microfinance is widely dependent on welfare donations,  low-interest，interest-free loans of international  organizations and government subsidies.

Institutionalism model

  •  institutional sustainability

 

  •  They emphasize the profits  instead of social mission.

Consumer lending

VS

Microfinance

Consumer lending

  • Scale and profit

Microfinance

  • Social bottom line

Conclusion

Microfinance provides:    

  1. ​relative small scale
  2. high interest rate  
  3. short repayment period financial credits

Improvements:

The high interest rate should be reduced to a more reasonable level

 

Microfinance should avoid information asymmetry and adverse selection 

THANK YOU

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