The Effects of Resource Management on Microfinance Loans

Open Access
- Author:
- Crouse, Kara Casey
- Area of Honors:
- Accounting
- Degree:
- Bachelor of Science
- Document Type:
- Thesis
- Thesis Supervisors:
- Orie Edwin Barron, Thesis Supervisor
Orie Edwin Barron, Thesis Honors Advisor
Edward Eugene Babcock Jr., Faculty Reader - Keywords:
- microfinance
resource management
controls
Kiva
Grameen - Abstract:
- More than 2.5 billion adults worldwide do not have an account at a financial institution according to The Global Findex Database established by The World Bank (Demirguc-Kunt 2). Seventy seven percent of adults living on less than $2/day help to make up this population, and because the hurdles to maintaining a formal bank account are so high, many of the world’s poor have turned to moneylenders to provide them with the capital they seek. This form of financing can have incredibly high interest rates, forcing the borrowers to pay back all or most of the returns they received from the loan in the first place. Because of this, a new idea was born in the 1970’s to provide the rural poor with access to micro credit in an effort to eliminate moneylenders and allow these individuals to support their own businesses (Yunus 21). Today, this idea has expanded into an entire network of microfinance institutions reaching over 130 million clients (Financial Institutions). Not only do these banks provide loans, but they also offer savings, insurance, and financial literacy programs. It is these institutions I will explore in my research, more specifically looking at the internal controls within microfinance organizations and how these programs instill confidence in both their borrowers and lenders. Finally, I will discuss what sort of controls and documents need to be in place in order for someone to establish a new microfinance branch in the future. Many of these documents gain their value in their clarity for potential borrowers to understand, and therefore should not be analyzed based on their complexity.