After a series of transitional phases, the microfinance industry has recognised that microfinance should comprise a variety of financial services, not only credit. In their endeavour to provide services to low-income populations, microfinance practitioners have therefore delivered services through a variety of institutional forms and delivery methods. While the outreach has been promising, the provision of services on a cost covering basis has lagged. Practitioners have attributed the difference in performance to differing country contexts (in particular urban, highly populated versus rural, less populated areas) and institutional capacity. / The goal of this thesis is, therefore, to identify factors which potentially affect the performance of microfinance institutions but have so far not found due consideration. With the increasing trend towards commercialization the microfinance industry, like commercial banking, relies more on economic, capitalist principles in cash based economies. These principles and the use and need for cash based services are assumed to be universally accepted and existing. I attempt to identify issues, in particular characteristics of societies, which contradict this notion and thus might impact on the performance of microfinance institutions. I examine these in Bogia District of Madang Province, a rural area of Papua New Guinea (PNG). In addition, I study a potential role model for a microfinance institution that might be able to integrate these local specificities beneficially into its service delivery. / This thesis makes this argument in theoretical terms in Chapters Two and Three, which comprise a review of factors affecting the performance of microfinance institutions, in particular focusing on factors so far not deeply researched. The review establishes that some issues are more considered as influencing performance than others. In particular the potential clients' understanding of economic principles and their familiarity with the functions and use of money in partly established cash economies find little consideration in the microfinance research literature. / Chapter Four provides background details to PNG and Chapter Five details the research methods as well as the field site. Chapters Six and Seven analyse the key findings of the field research, in particular: i) the local socio-economic and socio-cultural characteristics and their potential impact on the performance of microfinance institutions and ii) an application of these findings to examine whether a co-operative could serve as a role model for the successful service delivery in rural areas of PNG. / Through the field research it could be documented that these issues are crucial to identify for any microfinance institution since familiarity with financial services and functions of money and understandings of contractual obligations of villagers in rural areas, in particular for credit services, may vastly differ from the institutions’ perception. Through their remoteness villagers are also used to interact informally within their clan and kinship groups. Therefore, a co-operative set-up will be a suitable option for delivering microfinance services in rural areas of PNG since it is a familiar and accepted form and can incorporate local specificities into its service delivery and thereby contribute to the economic development of its members.
| Identifer | oai:union.ndltd.org:ADTP/285606 |
| Date | January 2010 |
| Creators | Spohn, Sabine |
| Source Sets | Australiasian Digital Theses Program |
| Language | English |
| Detected Language | English |
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