MMPS: Module 1 Flashcards
Microfinance also called
Microcredit
A type of banking service provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services.
Microfinance
True or False
While institutions participating in the area of microfinancemost often provide lending—microloans can range from as small as $100 to as large as $25,000—many banks offer additional services such as checking and savings accounts as well asmicro-insuranceproducts, and some even provide financial and business education.
TRUE
The goal of microfinance is
to ultimately give impoverished people an opportunity to become self-sufficient.
Microfinance services are provided to ___________________because most of those trapped in poverty, or who have limited financialresources, do not have enough income to do business with traditional financial institutions.
unemployed or low-income individuals
True or False
Microfinance allows people to take on reasonable small business loanssafely, and in a manner that is consistent with ethical lending practices.
TRUE
Although they exist all around the world, the majority of micro-financing operations occur in _______________, such as Uganda, Indonesia, Serbia, and Honduras.
developing nations
Many microfinance institutions focus on helping _______ in particular.
women
True or False
Unlike typical financing situations, in which the lender is primarily concerned with the borrower having enough collateral to cover the loan, many microfinance organizations focus on helping entrepreneurs succeed.
TRUE
In many instances, people seeking help from microfinance organizations are first required to take a _____________________. Lessons cover understanding interest rates,the concept of cash flow, how financing agreements and savings accounts work, how to budget, and how to manage debt.
basic money-management class.
Once educated, customers__________________.
may apply for loans.
The typical loan may sometimes be as low as?
Php 5,000
Like conventional lenders, micro-financiers must charge________________, and they institute specific repayment plans with payments due at regular intervals.
interest on loans
Some lenders require loan recipients to set aside a part of their income in a _______________, which can be used as insurance if the customer defaults.
savings account
True or False
MFIs offers a collateral.
FALSE (offers no collateral)
True or False
Micro-lenders often pool borrowers together as a buffer. After receiving loans, recipients repay their debts together. Because the success of the program depends on everyone’s contributions, this creates a form of peer pressure that can help to ensure repayment.
TRUE
Microfinance is not a new concept. Small operations have existed since the ___________.
18th century
This is the first occurrence of micro-lending.
Irish Loan Fund system
Irish Loan Fund system, introduced by ______________, sought to improve conditions for impoverished Irish citizens.
Jonathan Swift
True or False
In its modern form, micro-financing became popular on a large scale in the1970s.
TRUE
Which Microfinance Organization first to receive attention which was started in 1976 by Muhammad Yunusin Bangladesh?
Grameen Bank
In addition to providing loans to its clients, the Grameen Bank also suggests that its customers subscribe to its “___________,” a basic list of ways that the poor can improve their lives.
16 Decisions
True or False
The “16 Decisions” touch upon a wide variety of subjects ranging from a request to stop the practice of issuing dowries upon a couple’s marriage, to keepingdrinking watersanitary. In 2006, the Nobel Peace Prize was awarded to both Yunus and the Grameen Bank for their efforts in developing the microfinance system.
TRUE
Formed in 1998, this specific microfinance institution has grown to become one of the biggest microfinance operations in the world.
India’s SKS Microfinance
SKS works in a similar fashion to the Grameen Bank, pooling all borrowers into groups of ___________who work together to ensure that their loans are repaid.
five members
There are other microfinance operations around the world. Some larger organizations work closely with the ___________, while other smaller groups operate in different nations.
World Bank
True or False
Some organizations enable lenders to choose exactly who they want to support, categorizing borrowers with criteria such as level of poverty, geographic region, and type of small business.
TRUE
Which country has an organization that focus on providing women with the capital to undertake projects like growing eggplants and opening small cafés?
Uganda
The World Bank estimates that more than _________ people have directly or indirectly benefited from microfinance-related operations.
500 million
True or False
The International Finance Corporation(IFC), part of the larger World Bank Group, estimates that, as of 2014, more than 130 million people have directly benefited from microfinance-related operations. However, these operations are only available to approximately 15% of the three billion people who qualify as among the world’s poor.
FALSE (20% of the three billion people)
While microfinance interest rates are generally lower than conventional banks’, critics have charged that these operations are ______________________.
making money off of the poor.
One of the largest and most controversial For-Profit Controversy in MFIs.
Mexico’s Compartamos Banco
Mexico’s Compartamos Banco started in 1990 as a nonprofit. However, 10 years later, management decided to transform the enterprise into a traditional, for-profit company. In 2007, it went public on the Mexican Stock Exchange, and its initial public offering (IPO) raised more than _________.
P20 billion
Compartamos Banco and its for-profit peers have been criticized by many, including the grandfather of modern microfinance himself, _______________.
Muhammad Yunus
The immediate, pragmatic fear is that, out of a desire to make money, large microfinance bankers will charge higher interest rates that may create a debt trap for low-income borrowers.
But Yunus and others also have a more fundamental concern: that the incentive for microcredit should be ________________, not profit.
poverty alleviation
True or False
In response, Compartamos and other for-profit micro-financiers counter that commercialization allows them to operate more efficiently, and to attract more capital by appealing to profit-seeking investors. By becoming a profitable business, their argument goes, a microfinance bank is able to extend its reach, providing more money and more loans to low-income applicants.
TRUE
True or False
Microfinance loans jumped by more than 32 percent to P22.61 billion last year from P17.11 billion in 2017 as the number of microfinance-oriented banks almost doubled, the Bangko Sentral ng Pilipinas (BSP) said in the latest report on regional economic developments in the Philippines.
The BSP said microfinance service providers surged by 99 percent to 2,106 last year from 1,057 nationwide in 2017, while the number of borrowers inched up to 1.98 million from 1.95 million.
TRUE
This bridge the gap for financial inclusion.
Microfinance
Samples of MFIs in Albay Province
GSAC, Rural Bank of Guinobatan and Camalig Rural Bank
True or False
MFIs only caters unemployed and low-income individuals.
FALSE (they still also cater employed individuals)
True or False
Interest rates are not necessary for MFIs.
FALSE (these are necessary to ensure the stability of the institutions, mainly its maintenance of operations)
Basic Concepts of Microfinance
16 Decisions of the Grameen Bank
This is the governing law and institution that regulates microfinance operations in the Philippines.
Governing Institution:
Microfinance NGO Regulatory Council (MNRC)
Governing Law:
R.A. 10693 (Microfinance NGOs Act)
_____________ led the regions with the highest growth in the number of microfinance-oriented banks with 730 percent in 2018, followed by Zamboanga Peninsula with 558.3 percent, and Soccsksargen with 550 percent.
Cagayan Valley
True or False
The typical clients of microfinance are the economically active, entrepreneurial poor. These include household-based entrepreneurs, farmers, rural artisans and individuals in the informal sector.
TRUE
A place where two parties can gather to facilitate the exchange of goods and services. The parties involved are usually buyers and sellers.
Market
A place, physical or virtual or a target consumer.
Market
MFIs markets focus on
target consumer and market as an avenue of selling goods and services.
This refers to an illegal market where transactions occur without the knowledge of the government or other regulatory agencies.
Black Market
True or False
Many black markets exist in order to circumvent existing tax laws. This is why many involve cash-only transactions or other forms of currency, making them harder to track.
TRUE
True or False
When there is a surplus of certain goods and services in the economy, members of the black market step in and fill the void.
FALSE (surplus should be shortage)
Ticket scalping is one example of this specific market. When demand for concert tickets is high, scalpers will step in and sell them at inflated prices on this market.
Black Market
This brings many people together for the sale and purchase of specific lots of goods. The buyers or bidders try to top each other for the purchase price. The items up for sale end up going to the highest bidder.
Auction Market
This refers to any place where securities, currencies, bonds, and other securities are traded between two parties. These markets are the basis of capitalist societies, and they provide capital formation and liquidity for businesses. They can be physical or virtual.
Financial Market
Markets are arenas in which buyers and sellers can gather and interact. In general, only two parties are needed to make a trade, at minimum a third party is needed to introduce competition and bring balance to the market. As such, a market in a state of ____________, among other things, is necessarily characterized by a high number of active buyers and sellers.
perfect competition
Markets try to find some balance in price when supply and demand are themselves in balance. But that balance can in itself be disrupted by factors other than price including _________, ___________, ___________, __________________, and the __________________________.
incomes, expectations, technology, the cost of production, and the number of buyers and sellers in the market.
Other than ___________, most markets are subject to rules and regulations set by a regional or governing body that determines the market’s nature. This may be the case when the regulation is as wide-reaching and as widely recognized as an international trade agreement, or as local and temporary as a pop-up street market where vendors self-regulate through market forces.
black markets
A tangible item that is put on the market for acquisition, attention, or consumption.
Product
An intangible item, which arises from the output of one or more individuals.
Service
True or False
Although it seems like the main distinction between the two concepts (product and service) is founded on their tangibility, that is not always the case. In most cases services are intangible, but products are not always tangible.
TRUE
True or False
Products and services are not closely aligned.
FALSE (Both are closely aligned. In fact, a majority of products carry with them an element of service. For example, when aconsumerbuys a car, the product comes with a lot of other service responsibilities, such as tune-up and maintenance.)
Tangible vs. Intangible
Production vs. Interaction
Perishable vs. Imperishable
Self-study mo nalang toh bhie.
Godbless. (Module 1 PPT: Slide 31-34)
