The poor, like others, too need financial products and services in order to build assets, manage consumption and mitigate risks. Microfinance, in recent times, has emerged as a powerful tool to provide access to some financial services to the poor. For decades, poverty alleviation has topped the International development agenda. United Nations Millennium Goals state that by 2015 the number of people living in extreme poverty should be half of what it was in 2000. Microfinance addresses the twin goals of financial inclusion and poverty alleviation in a way that builds self-esteem in the individual and self-sufficiency in the institution providing the financial services. Different models have emerged in microfinance delivery based on their clientele, focus area, interest rate, savings linkages, collateral, coverage and organizational/legal structure. With all the successes of the existing microfinance models, the herculean task of poverty alleviation still leaves enough space for innovative models.
This study explores the potential of faith-based microfinance in complimenting the efforts of poverty alleviation and also overcoming the weaknesses in the existing models. Faith-based microfinance operate on distinct principles. The purpose of this study is to focus on the functioning of the faith based microfinance and to explore its role as an alternative tool of poverty alleviation. In order to get a meaningful insight regarding the impact of faith based microfinance on the lives of the beneficiaries, it is necessary that a comparison is made to the mainstream microfinance on commonly accepted parameters of poverty alleviation.
Table of Contents
1.1 Background to the Study
1.2 Research Problem, Purpose and Questions
1.3 Purpose of Research
1.4 Research Questions
1.5 Research Methodology
1.6 Scope of the Study and its relevance to the Management Discipline
1.7 Organization of the Thesis
1.8 Definitions and Key Concepts
References – Chapter 1
2.1 Overview of Microfinance
2.1.1 Key Principles of Microfinance
2.1.2 State of the Microfinance Sector
2.1.3 Role of Microfinance in Financial Inclusion and Poverty Alleviation
2.2 Models of Microfinance intervention
2.2.1 The Grameen Model
2.2.2 Individual Banking Program
2.2.3 Credit Unions
2.2.4 Village Banking
2.2.5 Self Help Groups/Associations
2.3 Impact Assessment of Microfinance Institutions
2.3.1 Types of Impact Studies
2.3.2 Factors of Impact Assessment
2.4 Need for Alternative Model
2.4.1 Challenges Confronting Microfinance
2.4.2 Desired Changes in the New Model
2.5 Conclusion
3.1 General Introduction and Background of Faith-based organizations
3.1.1 Influence of Faith in FBOs
3.1.2 Organizational Characteristics
3.1.3 Program Characteristics
3.1.4 Types of FBOs
3.2 Significance of FBO’s in development
3.3 Religious Faiths and Microfinance Principles
3.3.1 Hindu Faith and Microfinance
3.3.2 Christian Faith and Microfinance
3.3.3 Islamic Faith and Microfinance
3.4 Empirical studies on Faith-based Microfinance
3.5 List of Faith-based Microfinance Institutions
3.6 Conclusions
References – Chapter 3
4.1 Scientific Ideals
4.2 Theoretical Framework for Impact Assessment of Microfinance
4.3 AIMS-SEEP Framework
4.3.1 Design Strategies
4.3.2 Scope for Innovation
4.4 Phase 1: Case Study
4.4.1 Main Steps
4.5 Phase 2: Quantitative Study - Impact Assessment
4.5.1 Research Design
4.5.2 Research Type
4.5.3 Research Approach
4.5.4 Limitations of the Research
4.5.5 Indicators and Variables used in the study
4.5.6 Research Hypotheses
4.5.8 Sampling Plan
4.5.9 Data Collection
4.5.10 Content of the structured questionnaire
4.5.11 Pre-testing of the questionnaire
4.5.12 Data Analysis
5.1.1 Organizational Characteristics
5.1.2 Program Characteristics
5.1.3 Microfinance Program
5.2 A Case of Islamic Faith-based Microfinance: AL-KHAIR Cooperative Credit
Society Limited
5.2.1 Organizational Characteristics
5.2.2 PROGRAM CHARACTERISTICS
5.3.1 ORGANIZATIONAL CHARACTERISTICS
5.3.2 Program Characteristics
5.4.1 General Comparison
5.4.2 Comparison of performance of banking activities
5.5 Conclusion
References – Chapter 5
6.1.1 Details of sample from mainstream MFIs
6.2 Demographic Profile of Respondents
6.2.1 Age group
6.2.2 Gender
6.2.3 Gender and age-wise distribution
6.2.4 Religion
6.2.5 Education
6.3 SOCIO-ECONOMIC PROFILE
6.3.1 Head of household
6.3.2 Income
6.3.3 Occupation
6.3.4 Dwelling condition
6.3.5 Number of dependants
6.4 EXPERIENCE OF MICROFINANCE PROGRAM
6.4.1 Years of association with the MFI
6.4.2 Incidence of borrowing
6.4.3 Average Loan Amount
6.4.4 Loan Repayment period
6.4.5 Repayment Frequency
6.4.7 Use of Loans for Business
6.4.8 Savings with MFI
6.4.9 Use of other financial services
6.5 SOCIO-ECONOMIC IMPACT OF MICROFINANCE
6.5.1 Improvement in self-confidence after joining the program
6.5.2 Improvement in social position among relatives and family members
6.5.3 Treatment of women
6.5.4 Awareness of women's rights
6.5.5 Improvement in household income
6.5.6 Improvement in business income
6.5.7 Increase in household savings
6.5.8 Capacity to meet emergency needs
6.6 Client satisfaction
6.6.1 Reasonability of interest rates on loans
6.6.2 Procedure for obtaining loans
6.6.3 Repayment policy
6.6.4 Timely availability of loans
6.6.5 Discrimination in the disbursement of loans
6.6.6 Technical assistance in business
6.6.7 The office/point of transaction is conveniently located
6.6.8 Staff support
7.1 Findings
7.1.1 Common principles of faith-based and mainstream microfinance
7.1.2 Value addition by Faith-based microfinance
7.1.3 Performance of Faith-based microfinance
7.2 Recommendations
7.3 Contribution to Knowledge
7.4 Suggestions for Future Research
7.5 Challenges
7.6 Conclusion
Research Objectives & Key Themes
This research aims to analyze the functioning of faith-based microfinance institutions in India to evaluate their effectiveness as an alternative mechanism for poverty alleviation, specifically by comparing their performance with mainstream microfinance models regarding impact, sustainability, and client satisfaction.
- Comparison of faith-based and mainstream microfinance models.
- Assessment of the impact of microfinance programs on the socio-economic status of beneficiaries.
- Exploration of the role of "religious social capital" in financial inclusion.
- Evaluation of client satisfaction factors such as interest rates, repayment policies, and staff support.
- Analysis of the organizational characteristics and operational strategies of faith-based organizations.
Excerpt from the Book
1.1 Background to the Study
Of all the sectors of society, the poor are the ones most in need of financial assistance. And yet they seem to have been largely neglected by the formal institutions. Nonetheless, microfinance has been proven to reduce such financial exclusion to some extent by enabling the poor to build assets, manage consumption and mitigate risks. By delivering such essential financial services as savings, loans and remittance, microfinance has devised innovative financial instruments to meet the financial needs of these people previously excluded from mainstream financial services. The most traditional product of microfinance is micro-credit or micro-lending, which gives small poor businessmen access to capital, allowing them the opportunity to grow their enterprises and become profitable. Higher incomes and reduced vulnerability result in improved living conditions and impact the social fabric in many ways.
In a significant development of this innovative tool of microfinance, the United Nations declared the year 2005 as the International Year of Microcredit. In doing so, it recognized the contribution that microfinance can make towards achieving the United Nation’s Millennium Development Goals (MDG) adopted by the majority of world leaders in September 2000. The prominent role of microfinance in the alleviation of poverty is also acknowledged on many other platforms such as the G8 Declarations of 2005 and 2004, the Commission on Private Sector Development, the Microcredit Summit, the Declaration of the International Year for the Eradication of Poverty and the International Decade for Eradication of Poverty.
Summary of Chapters
Chapter 1: Introduction: This chapter provides the foundation for the study, covering the background of microfinance, research objectives, and the research problem statement regarding the limitations of existing mainstream models.
Chapter 2: Microfinance and Poverty Alleviation: This chapter reviews the literature on mainstream microfinance, discussing its impact on poverty and highlighting the systemic challenges that create a need for alternative models.
Chapter 3: Faith-based Microfinance: This chapter focuses on the theoretical framework of Faith-Based Organizations (FBOs), detailing their organizational characteristics and the principles of poverty alleviation within major religious traditions.
Chapter 4: Research Design and Methodology: This chapter outlines the research methodology, describing the two-phase approach (qualitative case studies followed by a quantitative impact assessment) and the data collection tools used.
Chapter 5: Cases of Faith-based Models of Microfinance: This chapter presents in-depth case studies of three specific institutions affiliated with Hindu, Islamic, and Christian faiths, analyzing their operations and organizational design.
Chapter 6: Performance Evaluation of Faith-based Microfinance: This chapter presents the empirical findings and statistical analysis, comparing the impact and satisfaction levels of beneficiaries in faith-based versus mainstream institutions.
Chapter 7: Summary of Findings and Recommendations: This concluding chapter synthesizes the findings, provides evidence-based recommendations, and discusses the future implications for policy and research.
Keywords
Microfinance, Poverty Alleviation, Faith-based Organizations, Financial Inclusion, Socio-economic Impact, Client Satisfaction, Case Study, India, Self-help Groups, Micro-credit, Religious Social Capital, Small Business, Empowerment, Sustainability, Development.
Frequently Asked Questions
What is the core focus of this research?
The book investigates the efficacy of faith-based microfinance institutions as an alternative tool for poverty alleviation in India, evaluating how their unique value systems and operational structures impact the poor compared to secular mainstream institutions.
What are the primary thematic Schwerpunkte of the study?
The study centers on three themes: understanding the organizational and programmatic nature of faith-based microfinance, measuring the socio-economic impact on beneficiaries, and assessing client satisfaction across different banking models.
What is the primary objective of the work?
The primary research objective is to determine if faith-based microfinance institutions offer a viable, sustainable alternative to mainstream models, particularly in reaching marginalized or excluded segments of society.
Which scientific methodology is employed?
The author utilizes a mixed-methods approach: qualitative in-depth case studies for organizational analysis and a quantitative survey-based approach for impact assessment using standardized metrics and statistical tools like the t-test.
What is covered in the main body of the text?
The main body spans the theoretical framework of microfinance and FBOs, detailed case studies of three Indian institutions (representing Hindu, Muslim, and Christian faiths), and a rigorous statistical comparison between these faith-based models and secular mainstream microfinance institutions.
Which keywords characterize this book?
Key terms include Microfinance, Poverty Alleviation, Faith-based Organizations, Financial Inclusion, Socio-economic Impact, and Client Satisfaction.
How does the author define a "faith-based" microfinance institution?
The author defines an FBO as any organization that derives inspiration, mission, and guidance for its activities from the teachings and principles of a faith or from a particular interpretation or school of thought within that faith.
What were the major findings regarding the impact of faith on microfinance performance?
The study finds that faith-based organizations often demonstrate greater cost efficiency and trust, and they are frequently more successful in reaching the "poorest of the poor" and marginalized segments due to cultural proximity and high levels of client satisfaction.
- Citar trabajo
- Dr Najmul Hoda (Autor), 2013, Faith-based Microfinance. An Alternative Tool of Poverty Alleviation, Múnich, GRIN Verlag, https://www.grin.com/document/434644
