nep-mfd New Economics Papers
on Microfinance
Issue of 2017‒10‒08
seven papers chosen by
Olivier Dagnelie
Université de Caen

  1. Can Micro Credit Schemes Be Introduced by Formal Banking Sector? By Mamoon, Dawood
  2. "Non-Financial Performance Measures on Local Culture Basis in Assessing The Health of Microfinance Institutions" By I Putu Astawa
  3. Numeracy and the quality of on-the-job decisions: Evidence from loan officers By Brown, Martin; Kirschenmann, Karolin; Spycher, Thomas
  4. Channeling Local Culture into Sustainable Microfinance Solutions by Akhuwat: From Borrowers to Donors By Bashir, Rabia; Bajwa, Sami; Mamoon, Dawood
  5. "Business Model in Islamic Perspective: Practising of Baitul Maal Wattamwil (BMT) UGT Sidogiri East Java Indonesia " By Achsania Hendratmi
  6. Business Model of Islamic Microfinance Institution: Indonesia Case By Imron Mawardi
  7. This research aims to explore and examine empirically Indonesian Muslim financial inclusion profile using panel data. We explore various indicators for example if individual have borrowed money from financial institution, having an account, amount of borrowed money, and amount of money saved in financial services. This research uses IFLS (Indonesian Family Life Survey) fourth wave (2007) and fifth wave (2014) that has wide range information on financial inclusion indicators and other socio-economics variables that are not provided by other almost-similar-type database in Indonesia. We use Ordinary Least Square and Logit estimation to estimate what factors determine the probability of individual to have an access to financial service and the amount of money and individual has on average. The findings suggest that those who have better access to financial services are coming from urban area with better wealth, mostly are male and live in urban area. Banks remain to be a dominant source for Muslim in Indonesia to get a loan. Another determinant factor that increases the possibility for Indonesian to get loan is whether an individual has access to commercial bank like Bank Republik Indonesia (BRI). Baitul Maal WatTamwil (BMT) as one of Islamic microfinance is found to be statistically significant to increase probability of Indonesian Muslim to get an access to loans. By Riswanti Budi Sekaringsih; Novat Pugo Sambodo; Meikha Azzani; Esa Assyahid

  1. By: Mamoon, Dawood
    Abstract: The paper explains the supply side dynamics of micro credit that is about the sustainability of Micro Finance Institutions. The study suggests that formal banking sector framework should be applied to micro credit schemes to analyse their efficiency. This may help us provide a methodology unconventional to micro credit literature that can provide guidelines for successful micro credit endeavors by formal financial institutions.
    Keywords: Financial Institutions, Micro Credit, Poverty
    JEL: G21
    Date: 2017–10–02
  2. By: I Putu Astawa (State Polytechnic of Bali, Indonesia Author-2-Name: I Made Sudana Author-2-Workplace-Name: State Polytechnic of Bali, Indonesia Author-3-Name: NGN Suci Murni Author-3-Workplace-Name: State Polytechnic of Bali, Indonesia)
    Abstract: "Objective – Health assessment on microfinance institutions was conducted through non-financial measurements consisted of assessment on general and risk managements. The assessment was commonly used to assess commercial banks. Microfinance institutions, however, are differed to commercial bank in terms of their closeness to the poor. The paper presented the development and analysis of non-financial performance measures using local culture basis that can be applied to properly assess microfinance institutions. Methodology/Technique – Qualitative study with ethnomethodology approach was applied to see cultural activities undertaken. Managers were considered as key informants. Results of qualitative study were analyzed using Fuzzy- Analytic Hierarchy Process method and Weighted Product Model was applied to weight the criteria and sub-criteria as well as the final assessment. Findings – Results showed that local culture activities that could be used to assess general management in microfinance institutions were providing assistance in establishing places of worship, supporting religious activities, supporting the development of facilities and infrastructures in the villages, relief activities of cultural festival, helping in funeral, wedding favors, educational assistance, medical assistance, forming arts groups, and business group. Novelty – This study suggests that non-financial performance measurements can use local culture and facilitate the management of microfinance institutions to perform performance measurement"
    Keywords: Non-Financial; Performance Measures; Local Culture; Microfinance Institutions.
    JEL: G21 G31
    Date: 2017–06–17
  3. By: Brown, Martin; Kirschenmann, Karolin; Spycher, Thomas
    Abstract: We examine how the numeracy level of employees influences the quality of their on-the-job decisions. Based on an administrative dataset of a retail bank we relate the performance of loan officers in a standardized math test to the accuracy of their credit assessments of small business borrowers. We find that loan officers with a high level of numeracy are more accurate in assessing the credit risk of borrowers. The effect is most pronounced during the pre-crisis credit boom period when it is arguably more difficult to pick out risky borrowers.
    Keywords: Behavioral Banking, Numeracy, Loan Officers, Screening
    JEL: G21 J24
    Date: 2017–07
  4. By: Bashir, Rabia; Bajwa, Sami; Mamoon, Dawood
    Abstract: This study is carried out to analyze the factors that results in conversion of borrowers into donors. The findings assist the microfinance institutions in coming up with the most appropriate measures to apply in order to eliminate not only defaults but also gain some financial sustainability by improving its donor profile. The study establishes that religious education and organizational religious philosophy influence borrower’s prosocial behaviors. Through religious teaching Akhuwat inculcate sense of responsibility, feeling of gratitude and psychological attachment, along with spiritual satisfaction to motivate borrowers to become donors. Being faith inspired organization; Akhuwat culture and its brand image depict strong association with Islamic value. The study recommends that the MFIs in order to enjoy a cordial relationship need to align their business philosophy with the local culture.
    Keywords: Donors, Pro social Behavior, Microfinance institutions, Akhuwat, Religion
    JEL: G2 G21 Z1 Z12
    Date: 2017–09–26
  5. By: Achsania Hendratmi (Universitas Airlanga, Indonesia. Author-2-Name: Mega Ayu Widayanti Author-2-Workplace-Name: Universitas Airlanga, Indonesia.)
    Abstract: "Objective – The purpose of the research is to explore, to investigate, and to develop a business model in Islamic perspective in microfinance BMT UGT Sidogiri Indonesia. Methodology/Technique – The research developed by qualitative research with a single case study. The content analysis used as the method to analyze the data describes analytic, intuitive, interpretative, textual and strict textual analysis approaches. Findings – The main finding that the framework Islamic business model in perspective Islam proposed previously can be well understanding and applied in BMT UGT Sidogiri. The result showed that there three main building in developing of an Islamic business model consist of the business foundation, business design, and business development. Novelty – The model can be used to optimize the potential business model of Islam in BMT UGT Sidogiri and other microfinance in Indonesia in the future."
    Keywords: "Islamic Business; Business Model; Islamic Business Construct; Islamic Business Aims; Baitul Maal Wattamwil (BMT)."
    JEL: K20 M21
    Date: 2017–03–16
  6. By: Imron Mawardi (Universitas Airlangga, Indonesia Author-2-Name: Tika Widiastuti Author-2-Workplace-Name: Universitas Airlangga, Indonesia Author-3-Name: Ari Prasetyo Author-3-Workplace-Name: Universitas Airlangga, Indonesia)
    Abstract: "Objective – Islamic Microfinance Institutions (IMFIs) grown very rapidly in the last 10 years in Indonesia. On 2015, the number of IMFIs’ reached more than 5,000. As a business and social entity, IMFIs has various business models, the way in providing services and manages the business to achieve its goals. This study aims to determine the business models of IMFIs. Methodology/Technique – This study uses qualitative approach by case study technique of Robert K. Yin. Subjects of this study are IMFIs in Indonesia that selected purposively with managers as a key informant. Findings – The result is the business model of IMFI is determined by eight elements, namely: organizational orientation, business and social functions, the source of capital and allocation, investors and customers, financing usage, types of contract, allocation technique, and membership. Novelty – The elements that determine IMFI, will form a business model of IMFI which determine how IMFI runs its business activities to achieve organization objective."
    Keywords: Islamic Microfinance Institution; Business Model; Social Function.
    JEL: G21 L22
    Date: 2017–03–16
  7. By: Riswanti Budi Sekaringsih (Centre for Research in Islamic Economics and Business (PKEBS), Faculty of Economics and Business, Universitas Gadjah Mada and Department of Islamic Economics, Faculty of Islamic Economics and Business, State Islamic University (UIN) Sunan Kalijaga Yogyakarta); Novat Pugo Sambodo (Centre for Research in Islamic Economics and Business (PKEBS), Faculty of Economics and Business, Universitas Gadjah Mada); Meikha Azzani (Centre for Research in Islamic Economics and Business (PKEBS), Faculty of Economics and Business, Universitas Gadjah Mada); Esa Assyahid (Centre for Research in Islamic Economics and Business (PKEBS), Faculty of Economics and Business, Universitas Gadjah Mada)
    Keywords: Financial Inclusion, Muslim, OLS, Logit, IFLS
    JEL: D12
    Date: 2016–07

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