This thesis deals with the matter of development and methods of formation and goals of providing the development asistence. Furthermore, it describes the attitudes of various stakeholders participating in development cooperation. The author, in addition, offers tools for success in the fight against poverty and for achieving sustainable socio-economic development. Emphasis is placed on the microfinance system, which serves to ensure that poor people are given the opportunity to do business and escape the poverty by their working and effort.

In the introduction of the master thesis, the historical development and the reasons for the emergence of microfinance are described. The thesis focuses on comparison of the functioning of microfinance in various developing regions of the world, as well as on the analysis of the overall functioning, effectiveness, strengths and weaknesses, potential threats and opportunities in the microfinance markets. The conclusion offers several possibilities and insights on how microfinance could be more efficient in financial terms. The thesis also presents a brief evaluation of the benefits of microfinance and based on findings provides a prediction of further development of microfinance.

The thesis discusses economic development and fight against poverty in Kenya.The aim is to prove that the development assistance is not the the main incentive for the economic development in Kenya and the kenyan government should focus on alternative development paths. The paper tries to analyze development assistance and to find arguments against it, describes other forms of capital inflow, such as foreign trade, foreign investment and microfinance. The first chapter defines the basic concepts and puts the arguments for and against development aid. The second chapter discusses alternative paths of development. In the third chapter the paper starts with the analytical section where political and economic situation in Kenya, development aid and business environment are analyzed. The importance of foreign trade, foreign investment and microfinance is demonstrated. The last chapter analyzes the selected microfinance institutions in Kenya and it contains a case study from the field.

The first chapter provides a comprehensive overview of microfinance academic literature with emphasis on recent innovations, trends and efficiency. In particular, we focus on controversial issues of microfinance, such as commercialization, regulation, interest rate policy and the balance between outreach and performance of MFIs. The next chapter especially investigates the role of public expenditures and general government debt in microfinance performance in Latin America and the Caribbean. Microfinance institutions finance their business activities primary with clients' deposits, equity or with external funding. The aim of the third chapter is to verify whether the external funding, macroeconomic development and the size of banking sector have some impact on a microfinance performance. This study investigates, as well, the possible reasons why many microfinance institutions have gradually experienced a decrease in the share of female borrowers in their portfolios over the last few years. The final chapter is focused on the impact of macroeconomic environment and internal variables of the microfinance sector on microfinance interest rates.

The objective of this thesis is to evaluate, whether microfinance are a suitable instrument for development aid. It maps the factors that caused the microfinance crisis in 2008 to 2010 and validates the proposed reform measures. It describes and compares the effeciency and results of microfinance substitutes in the field of development aid, which are governmental, non-governmental and commercial programmes with similar objectives declared. It also analyses data from 2008 to 2014 from the point of view of social indicator reporting and acceptance of the new concept among microfinance institutions. Conclusion is reached based on these three components: ability to reform microfinance, possibilities of other programmes and situation in social reporting. Microfinance isn´t a suitable instrument for poverty reduction as such, but serves as a complement to provide for development of poor regions and financial inclusion of poor inhabitants.

Microfinance was rapidly hailed as a poverty alleviation tool by development agencies, researchers and practitioners. Despite the increasing capacity of MFIs to manage their financial sustainability, impact studies available report disappointingly low social achievements. Social performance assessment tools available struggle to combat a narrow MFI-centric approach which often overlooks contextual issues and institutional characteristics which can influence MFIs’ poverty reduction potential. This research’s main objective is to identify which and explain how organisational structures and management systems impact on MFIs’ social performance. This work uses a bottom-up research strategy, based on a 10-month extensive fieldwork in Bangladesh, a 490 household data-set, an ethnographic community study in Modhupur and institutional analyses of ASA and PDBF. It analyses the livelihoods, capitals and strategies of rural households in Bangladesh, explores their perceptions and experiences of microfinance and examines the management of socio-financial trade-offs within MFIs at different hierarchical levels. The research’s main findings seriously question the poverty reducing potential of standardised commercialised microfinance in settings characterised by vulnerability, shocks and seasonality, such as rural Bangladesh. It finds that although most MFIs have similar poverty reduction missions it is the way in which their organisational structures, managementsystems and working cultures are arranged that shapes their financial and social achievements. There is strong evidence that commercial MFIs can experience a silent practice drift at the field level in Bangladesh and that the commercialisation of MFIs provides strong incentives for the field staff to prioritise the achievement of their financial targets to the detriment of social performance, discouraging them from reporting low social performance. There are therefore few reasons why MFI senior managers should question their model and policies. This drift can manifest itself through malpractices hard-selling of loans, poor client selection and follow-up procedures, forcing clients into borrowing more and larger loans, using extreme forms of pressure through abusive language and behaviours and micro-collateral. This process usually has longer-term negative impacts on clients, especially the very poor who adopt successive short-term coping tactics to meet inflexible repayment schedules. This thesis concludes that commercial microfinance should not be targeted to the poorest and that more consideration should be given to clientselection and follow-up procedures. This thesis argues that the commercialisation of the global microfinance industry serves the interests of diverse stakeholders who contribute to maintaining the industry’s reputation though the media. This can be deemed an iceberg industry (that shows little of its actual workings and impacts to the public) which is sustained through considerable support from an increasing number of private investors for whom MFIs’ commercial expansion (regardless of its social achievements) serves their financial and political interests.

M.Com. (Business Management) / The aim of this research study is to investigate the effect of the National Credit Act on a micro-lending financial institution, namely Old Mutual Finance. The objective of the study is to gain insight from Old Mutual management staff on how their sales and operations have been affected since the inception of the Act and to reflect on their experiences and perception regarding the Act. The study also assesses Old Mutual Finance customers’ level of awareness and perceptions regarding the Act. The purpose of the National Credit Act is to promote and advance the social and economic welfare of South Africans, promote a fair, transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market and industry, and to protect consumers. A mixed model research was used where both qualitative and quantitative data collection techniques and analysis procedures were used and combined. For qualitative data collection, five senior management staff of Old Mutual Finance were interviewed. This entailed face-to-face interviews which were semi-structured, their responses were manually written and also digitally recorded. The quantitative method involved the use of a survey of two hundred and thirty two of their customers from four different Old Mutual Finance branches located in Johannesburg. The results of the study indicate that the National Credit Act is considered to be appropriate legislation with good intentions. However, some aspects of the legislation need to be addressed to ensure that credit providers are able to smoothly implement its rules and regulations in the lending market. Concerns pertaining to the lack of consumer knowledge or low financial literacy were also raised. Using the promax rotation and eigenvalues exceeding one, three factors namely, Knowledge of the Act, Attitudes towards the Act and Perception towards credit in general were identified which together explained the 47% of the variance for the entire set of variables. These three factors corresponded to the themes of the customer questionnaire.

The theoretical literature on Microfinance claims that Microfinance methodology can help alleviate the poverty. Mongolia is one of the countries where Microfinance is implemented and said to be successful in building a deeper and broader access to financial services. The purpose of this paper is to investigate how well Microfinance is being implemented in Mongolia and what the current practice is and, most importantly, how well the microfinance methodology works. In order to answer the last question, data collected from the proximity of the Central Asian Region including Mongolia was used. Nowadays there are number of microfinance institutions operating Mongolia such as Xacbank, Credit Mongolia. Despite the previously informal microfinance bodies such pawnshops, it appears that there was still some room on the market for Microfinance to fit in. The achievements of these Microfinance institutions are remarkable given Mongolia's extremely low population density and weak infrastructure. Research on the effectiveness of microfinance methodologies are in demand. Therefore, this paper offers research on microfinance practices such as group lending, rural lending and targeting women as well. A panel data of 90 microfinance institutions in 8 countries from the region was used. The result is rather mixed. Targeting women and lending to the rural customers seem to be working. However, group lending is found to be increasing portfolio risk and while having no effect on the financial revenue and the profitability.

abstract: In this paper, I study many-to-one matching markets in a dynamic framework with the following features: Matching is irreversible, participants exogenously join the market over time, each agent is restricted by a quota, and agents are perfectly patient. A form of strategic behavior in such markets emerges: The side with many slots can manipulate the subsequent matching market in their favor via earlier matchings. In such a setting, a natural question arises: Is it possible to analyze a dynamic many-to-one matching market as if it were either a static many-to-one or a dynamic one-to-one market? First, I provide sufficient conditions under which the answer is yes. Second, I show that if these conditions are not met, then the early matchings are "inferior" to the subsequent matchings. Lastly, I extend the model to allow agents on one side to endogenously decide when to join the market. Using this extension, I provide a rationale for the small amount of unraveling observed in the United States (US) medical residency matching market compared to the US college-admissions system. Micro Finance Institutions (MFIs) are designed to improve the welfare of the poor. Group lending with joint liability is the standard contract used by these institutions. Such a contract performs two roles: it affects the composition of the groups that form, and determines the properties of risk-sharing among their members. Even though the literature suggests that groups consist of members with similar characteristics, there is evidence also of groups with heterogeneous agents. The underlying reason is that the literature lacked the risk-sharing behavior of the agents within a group. This paper develops a model of group lending where agents form groups, obtain capital from the MFI, and share risks among themselves. First, I show that joint liability introduces inefficiency for risk-averse agents. Moreover, the composition of the groups is not always homogeneous once risk-sharing is on the table. / Dissertation/Thesis / Doctoral Dissertation Economics 2020

This dissertation contributes to studies in macroeconomics, microfinance, entrepreneurship, financial technology innovation (FinTech), and economic development. In particular, I study unbanked problems and evaluate microfinance programs. Chapter 1 studies quantitatively how a microfinance program in the U.S. affects occupational choice, firm size, credit access, wages, output, inequality and welfare. The general equilibrium model has heterogeneous agents, a bank with a minimum loan size requirement and a microfinance institution (MFI) with a loan interest rate that exceeds the bank's. Four microfinance program policies are evaluated: alternative minimum loan size requirements, changes in the loan cost wedge (due to innovation or regulation), changes to the level of the government subsidy, and alternative MFI sustainability requirements. We find that MFIs can have significant welfare effects for some individuals. In Chapter 2, I introduce a microsavings program for low-wealth individuals in a general equilibrium model with heterogeneous agents. The model incorporates that (i) traditional banks require a minimum savings deposit size, causing some individuals to become “unbanked,'' and (ii) banks and non-profits partner to offer microsavings programs to the unbanked. The paper finds that microsavings programs increase the percentage of entrepreneurs by providing collateral that the previously unbanked can use to start firms, and wages increase, which benefits workers. Second, government subsidies for microsavings programs expand the size and number of firms, but output and workers may decline when funding the program requires higher income taxes. Third, bank sector deregulation (i.e., lower transaction costs in the financial sector) leads to higher output per capita, wages, and firm numbers, and possibly lower income inequality among entrepreneurs. Finally, technological innovations that decrease deposit transaction costs, such as mobile banking, reduce funding pressure on microsavings programs, but have little effect on the percentage of entrepreneurs, firm size, entrepreneur returns or wages.