Lesson 2 Flashcards
One of the principles of microfinance that states that just like everyone else, poor people need a wide range of financial services that are convenient, flexible, and reasonably priced. Depending on their circumstances, poor people need not only credit, but also savings, cash transfers, and insurance.
a. The poor need a variety of financial services, not just loans.
b. Microfinance is a powerful instrument against poverty.
c. Microfinance means building financial systems that serve the poor.
d. Financial sustainability is necessary to reach significant numbers of poor people.
e. Microfinance is about building permanent local financial institutions.
f. Microcredit is not always the answer.
g. Interest rate ceilings can damage poor people’s access to financial services.
h. The government’s role is as an enabler, not as a direct provider of financial services.
i. Donor subsidies should complement, not compete with private sector capital.
j. The lack of institutional and human capacity is the key constraint.
k. The importance of financial and outreach transparency.
The poor need a variety of financial services, not just loans.
A principle that states that the access to sustainable financial services enables the poor to increase incomes, build assets, and reduce their vulnerability to external shocks. Microfinance allows poor households to move from everyday survival to planning for the future, investing in better nutrition, improved living conditions, and children’s health and education.
a. The poor need a variety of financial services, not just loans.
b. Microfinance is a powerful instrument against poverty.
c. Microfinance means building financial systems that serve the poor.
d. Financial sustainability is necessary to reach significant numbers of poor people.
e. Microfinance is about building permanent local financial institutions.
f. Microcredit is not always the answer.
g. Interest rate ceilings can damage poor people’s access to financial services.
h. The government’s role is as an enabler, not as a direct provider of financial services.
i. Donor subsidies should complement, not compete with private sector capital.
j. The lack of institutional and human capacity is the key constraint.
k. The importance of financial and outreach transparency.
Microfinance is a powerful instrument against poverty
A principle that states that poor people constitute the vast majority of the population in most developing countries. Yet, an overwhelming number of the poor continue to lack access to basic financial services. In many countries, microfinance continues to be seen as a marginal sector and primarily a development concern for donors, governments, and socially-responsible investors. In order to achieve its full potential of reaching a large number of the poor, microfinance should become an integral part of the financial sector.
a. The poor need a variety of financial services, not just loans.
b. Microfinance is a powerful instrument against poverty.
c. Microfinance means building financial systems that serve the poor.
d. Financial sustainability is necessary to reach significant numbers of poor people.
e. Microfinance is about building permanent local financial institutions.
f. Microcredit is not always the answer.
g. Interest rate ceilings can damage poor people’s access to financial services.
h. The government’s role is as an enabler, not as a direct provider of financial services.
i. Donor subsidies should complement, not compete with private sector capital.
j. The lack of institutional and human capacity is the key constraint.
k. The importance of financial and outreach transparency.
Microfinance means building financial systems that serve the poor.
the act of achieving the highest revenue or profit.
a. profit maximization
b. poverty alleviation
Profit maximization
a set of measures, both economic and humanitarian, that are intended to permanently lift people out of poverty
a. profit maximization
b. poverty alleviation
Poverty alleviation
A principle in microfinance that states that most poor people are not able to access financial services because of the lack of strong retail financial intermediaries. Building financially sustainable institutions is not an end in itself. It is the only way to reach significant scale and impact far beyond what donor agencies can fund. Sustainability is the ability of a microfinance provider to cover all of its costs. It allows the continued operation of the microfinance provider and the ongoing provision of financial services to the poor. Achieving financial sustainability means reducing transaction costs, offering better products and services that meet client needs, and finding new ways to reach the unbanked poor.
a. The poor need a variety of financial services, not just loans.
b. Microfinance is a powerful instrument against poverty.
c. Microfinance means building financial systems that serve the poor.
d. Financial sustainability is necessary to reach significant numbers of poor people.
e. Microfinance is about building permanent local financial institutions.
f. Microcredit is not always the answer.
g. Interest rate ceilings can damage poor people’s access to financial services.
h. The government’s role is as an enabler, not as a direct provider of financial services.
i. Donor subsidies should complement, not compete with private sector capital.
j. The lack of institutional and human capacity is the key constraint.
k. The importance of financial and outreach transparency.
Financial sustainability is necessary to reach significant numbers of poor people
A principle in microfinance that states that building financial systems for the poor means building sound domestic financial intermediaries that can provide financial services to poor people on a permanent basis. Such institutions should be able to mobilize and recycle domestic savings, extend credit, and provide a range of services. Dependence on funding from donors and governments—including government-financed development banks—will gradually diminish as local financial institutions and private capital markets mature.
a. The poor need a variety of financial services, not just loans.
b. Microfinance is a powerful instrument against poverty.
c. Microfinance means building financial systems that serve the poor.
d. Financial sustainability is necessary to reach significant numbers of poor people.
e. Microfinance is about building permanent local financial institutions.
f. Microcredit is not always the answer.
g. Interest rate ceilings can damage poor people’s access to financial services.
h. The government’s role is as an enabler, not as a direct provider of financial services.
i. Donor subsidies should complement, not compete with private sector capital.
j. The lack of institutional and human capacity is the key constraint.
k. The importance of financial and outreach transparency.
Microfinance is about building permanent local financial institutions
A principle of microfinance that states that microcredit is not appropriate for everyone or every situation. The destitute and hungry who have no income or means of repayment need other forms of support before they can make use of loans. In many cases, small grants, infrastructure improvements, employment and training programs, and other non-financial services may be more appropriate tools for poverty alleviation. Wherever possible, such non-financial services should be coupled with building savings.
a. The poor need a variety of financial services, not just loans.
b. Microfinance is a powerful instrument against poverty.
c. Microfinance means building financial systems that serve the poor.
d. Financial sustainability is necessary to reach significant numbers of poor people.
e. Microfinance is about building permanent local financial institutions.
f. Microcredit is not always the answer.
g. Interest rate ceilings can damage poor people’s access to financial services.
h. The government’s role is as an enabler, not as a direct provider of financial services.
i. Donor subsidies should complement, not compete with private sector capital.
j. The lack of institutional and human capacity is the key constraint.
k. The importance of financial and outreach transparency.
Microcredit is not always the answer.
A principle of microfinance that states that it costs much more to make many small loans than a few large loans. Unless microlenders can charge interest rates that are well above average bank loan rates, they cannot cover their costs, and their growth and sustainability will be limited by the scarce and uncertain supply of subsidized funding. When governments regulate interest rates, they usually set them at levels too low to permit sustainable microcredit. At the same time, microlenders should not pass on operational inefficiencies to clients in the form of prices (interest rates and other fees) that are far higher than they need to be.
a. The poor need a variety of financial services, not just loans.
b. Microfinance is a powerful instrument against poverty.
c. Microfinance means building financial systems that serve the poor.
d. Financial sustainability is necessary to reach significant numbers of poor people.
e. Microfinance is about building permanent local financial institutions.
f. Microcredit is not always the answer.
g. Interest rate ceilings can damage poor people’s access to financial services.
h. The government’s role is as an enabler, not as a direct provider of financial services.
i. Donor subsidies should complement, not compete with private sector capital.
j. The lack of institutional and human capacity is the key constraint.
k. The importance of financial and outreach transparency.
Interest rate ceilings can damage poor people’s access to financial services.
A principle of microfinance that states that the national governments play an important role in setting a supportive policy environment that stimulates the development of financial services while protecting poor people’s savings. The key things that a government can do for microfinance are to maintain macroeconomic stability, avoid interest-rate caps, and refrain from distorting the market with unsustainable subsidized, high-delinquency loan programs. Governments can also support financial services for the poor by improving the business environment for entrepreneurs, clamping down on corruption, and improving access to markets and infrastructure. In special situations, government funding for sound and independent microfinance institutions may be warranted when other funds are lacking.
a. The poor need a variety of financial services, not just loans.
b. Microfinance is a powerful instrument against poverty.
c. Microfinance means building financial systems that serve the poor.
d. Financial sustainability is necessary to reach significant numbers of poor people.
e. Microfinance is about building permanent local financial institutions.
f. Microcredit is not always the answer.
g. Interest rate ceilings can damage poor people’s access to financial services.
h. The government’s role is as an enabler, not as a direct provider of financial services.
i. Donor subsidies should complement, not compete with private sector capital.
j. The lack of institutional and human capacity is the key constraint.
k. The importance of financial and outreach transparency.
The government’s role is as an enabler, not as a direct provider of financial services.
A principle of microfinance that states that donors should use appropriate grant, loan, and equity instruments on a temporary basis to build the institutional capacity of financial providers, develop supporting infrastructure (like rating agencies, credit bureaus, audit capacity, etc.), and support experimental services and products. In some cases, longer-term donor subsidies may be required to reach sparsely populated and otherwise difficult-to-reach populations. To be effective, donor funding must seek to integrate financial services for the poor into local financial markets; apply specialist expertise to the design and implementation of projects; require that financial institutions and other partners meet minimum performance standards as a condition for continued support; and plan for exit from the outset.
a. The poor need a variety of financial services, not just loans.
b. Microfinance is a powerful instrument against poverty.
c. Microfinance means building financial systems that serve the poor.
d. Financial sustainability is necessary to reach significant numbers of poor people.
e. Microfinance is about building permanent local financial institutions.
f. Microcredit is not always the answer.
g. Interest rate ceilings can damage poor people’s access to financial services.
h. The government’s role is as an enabler, not as a direct provider of financial services.
i. Donor subsidies should complement, not compete with private sector capital.
j. The lack of institutional and human capacity is the key constraint.
k. The importance of financial and outreach transparency.
Donor subsidies should complement, not compete with private sector capital.
A principle of microfinance that states that microfinance is a specialized field that combines banking with social goals, and capacity needs to be built at all levels, from financial institutions through the regulatory and supervisory bodies and information systems, to government development entities and donor agencies. Most investments in the sector, both public and private, should focus on this capacity building.
a. The poor need a variety of financial services, not just loans.
b. Microfinance is a powerful instrument against poverty.
c. Microfinance means building financial systems that serve the poor.
d. Financial sustainability is necessary to reach significant numbers of poor people.
e. Microfinance is about building permanent local financial institutions.
f. Microcredit is not always the answer.
g. Interest rate ceilings can damage poor people’s access to financial services.
h. The government’s role is as an enabler, not as a direct provider of financial services.
i. Donor subsidies should complement, not compete with private sector capital.
j. The lack of institutional and human capacity is the key constraint.
k. The importance of financial and outreach transparency.
The lack of institutional and human capacity is the key constraint.
Accurate, standardized, and comparable information on the financial and social performance of financial institutions providing services to the poor is imperative. Bank supervisors and regulators, donors, investors, and more importantly, the poor who are clients of microfinance need this information to adequately assess risk and returns.
a. The poor need a variety of financial services, not just loans.
b. Microfinance is a powerful instrument against poverty.
c. Microfinance means building financial systems that serve the poor.
d. Financial sustainability is necessary to reach significant numbers of poor people.
e. Microfinance is about building permanent local financial institutions.
f. Microcredit is not always the answer.
g. Interest rate ceilings can damage poor people’s access to financial services.
h. The government’s role is as an enabler, not as a direct provider of financial services.
i. Donor subsidies should complement, not compete with private sector capital.
j. The lack of institutional and human capacity is the key constraint.
k. The importance of financial and outreach transparency.
The importance of financial and outreach transparency.
(Objective of Microfinance)
Typically, the poor acquire financial services like loans through informal relationships. These loans, however, come at a high cost per dollar loaned and can be unreliable. Furthermore, banks have not traditionally viewed poor people as viable clients and often will reject them due to unstable credit or employment history and lack of collateral. MFIs dismiss such requirements and provide small loans at high interest rates, thus providing MFIs the funds they need to continue operation.
a. PROVIDE ACCESS TO FUNDS
b. ENCOURAGE ENTREPRENEURSHIP AND SELF-SUFFICIENCY
c. MANAGE RISK
d. EMPOWER WOMEN
e. COMMUNITY-WIDE BENEFITS
PROVIDE ACCESS TO FUNDS
(Objectives of Microfinance)
Underprivileged people may have potentially profitable business ideas, but they cannot put them into action because they lack sufficient capital for start-up costs. Microcredit loans give clients just enough money to get their idea off the ground so they can begin turning a profit. They can then pay off their micro-loan and continue to gain income from their venture indefinitely.
a. PROVIDE ACCESS TO FUNDS
b. ENCOURAGE ENTREPRENEURSHIP AND SELF-SUFFICIENCY
c. MANAGE RISK
d. EMPOWER WOMEN
e. COMMUNITY-WIDE BENEFITS
ENCOURAGE ENTREPRENEURSHIP AND SELF-SUFFICIENCY
(Objectives of Microfinance)
Microcredit can give impoverished people enough financial stability to cross from simply surviving to accruing savings. This gives them protection from sudden financial problems that could have been devastating. Savings also allow for educational investment, improved nutrition, better living conditions and reduced illness. Microinsurance provides people the ability to pay for health care when needed, so they can receive treatment for health conditions before they become grave and more costly to treat.
a. PROVIDE ACCESS TO FUNDS
b. ENCOURAGE ENTREPRENEURSHIP AND SELF-SUFFICIENCY
c. MANAGE RISK
d. EMPOWER WOMEN
e. COMMUNITY-WIDE BENEFITS
MANAGE RISK
(Objectives of Microfinance)
Women make up a large proportion of microfinance beneficiaries. Traditionally, women (especially those in underdeveloped countries) have been unable to readily participate in economic activity. Microfinance provides women with the financial backing they need to start business ventures and actively participate in the economy. It gives them confidence, improves their status and makes them more active in decision-making, thus encouraging gender equality. According to CGAP (Consultative Group to Assist the Poor) , long-standing MFIs even report a decline in violence towards women since the inception of microfinance.
a. PROVIDE ACCESS TO FUNDS
b. ENCOURAGE ENTREPRENEURSHIP AND SELF-SUFFICIENCY
c. MANAGE RISK
d. EMPOWER WOMEN
e. COMMUNITY-WIDE BENEFITS
EMPOWER WOMEN
(Objectives of Microfinance)
Generally speaking, microfinance institutions seek to reduce poverty worldwide. As they obtain funds and services from MFIs, recipients gain enormous financial benefits which trickle down to others in their families and communities. New business ventures can provide jobs, thereby increasing income among community members and improving their overall well-being. Microfinance services gives hope to people who previously had little or no opportunity to be self-sufficient.
a. PROVIDE ACCESS TO FUNDS
b. ENCOURAGE ENTREPRENEURSHIP AND SELF-SUFFICIENCY
c. MANAGE RISK
d. EMPOWER WOMEN
e. COMMUNITY-WIDE BENEFITS
COMMUNITY-WIDE BENEFITS
freedom from the control, influence, support, aid, or the like, of others.
a. independence
b. empowerment
c. transparency
cooperation
d. transfer of significant ownership
e. merger and acquisition
f. merger
g. acquisition
Independence
the process of becoming stronger and more confident, especially in controlling one’s life and claiming one’s rights.
a. independence
b. empowerment
c. transparency
cooperation
d. transfer of significant ownership
e. merger and acquisition
f. merger
g. acquisition
Empowerment
being completely visible and open to scrutiny, so that it’s clear that nothing is being hidden.
a. independence
b. empowerment
c. transparency
cooperation
d. transfer of significant ownership
e. merger and acquisition
f. merger
g. acquisition
Transparency
an act or instance of working or acting together for a common purpose or benefit
a. independence
b. empowerment
c. transparency
cooperation
d. transfer of significant ownership
e. merger and acquisition
f. merger
g. acquisition
Cooperation
The act of point in place or time at which ownership of a thing is passed from one person to another
a. independence
b. empowerment
c. transparency
cooperation
d. transfer of significant ownership
e. merger and acquisition
f. merger
g. acquisition
Transfer of Significant Ownership
refers to the consolidation of companies or their major business assets through financial transactions between companies
a. independence
b. empowerment
c. transparency
cooperation
d. transfer of significant ownership
e. merger and acquisition
f. merger
g. acquisition
mergers and acquisitions (M&A)
one company purchases another outright
a. independence
b. empowerment
c. transparency
cooperation
d. transfer of significant ownership
e. merger and acquisition
f. merger
g. acquisition
acquisition
is the combination of two firms, which subsequently form a new legal entity under the banner of one corporate name
a. independence
b. empowerment
c. transparency
cooperation
d. transfer of significant ownership
e. merger and acquisition
f. merger
g. acquisition
merger
Just like everyone else, poor people need a wide range of ______ that are convenient, flexible, and reasonably priced.
financial services
Depending on their circumstances, poor people need not only credit, but also ____ _____, and _____.
clue: SCI
savings, cash transfers, and insurance
Access to sustainable financial services enables the poor to increase incomes, build assets, and reduce their vulnerability to ____
clue: ES
external shocks
