• Title/Summary/Keyword: Microcredit Regulatory Authority

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An Overview of the Microfinance Sector in Bangladesh

  • Mia, Md Aslam
    • Asian Journal of Business Environment
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    • v.7 no.2
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    • pp.31-38
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    • 2017
  • Purpose - While microfinance institutions(MFIs) from Bangladesh, such as Grameen Bank, received worldwide recognition and the Nobel Peace Prize in 2006, however, there is a paucity of research that provided a comprehensive discussion on the characteristics of the microfinance industry. Hence, the aim of this paper is to discuss some important aspects of the microfinance sector in Bangladesh. Research design, data, and methodology - This study used secondary sources of data, such as annual reports of the Microcredit Regulatory Authority (MRA) and the World Bank database in its descriptive analysis. Results - This study found that Bangladesh has made remarkable progress in her socio-economic and economic development in the last few decades. It is also generally perceived that microfinance has placed significant contribution on such socio-economic development. While microfinance observed unprecedented growth domestically, however, the regulatory framework is still rather weak, and a majority of the MFIs are found to be concentrated in the well-off areas (e.g., Dhaka, Chittagong etc.). Conclusions - The findings are significantly important for the parties who are interested to know the microfinance sector in Bangladesh. To some extent, the findings of this study will provide policy implications that may benefit the industry.

Does Microfinance Institution Has Institutional Properties to Generate Savings?

  • Mia, Md Aslam;Tabet, Imene
    • Asian Journal of Business Environment
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    • v.6 no.3
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    • pp.11-14
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    • 2016
  • Purpose - Microfinance institutions (MFIs) in Bangladesh have been providing savings services to their clients at least for the past 15 years. However, whether an MFI should have institutional requirement(s) to be a deposit-taker generates interest among academics and policy makers. Thus, this short note aims to provide a brief overview of institutional properties of MFIs. Research Design, Data, and Methodology - This study used the existing literature and reports by the Microcredit Regulatory Authority' to investigate institutional properties of MFIs. In doing so, we have used 'institutional theory of saving' as a theoretical ground. Although the 'institutional theory of saving' has several important properties, the existing literature mostly discusses seven features such as information, incentives, facilitation, expectation, access, restrictions and security. Results - It is found that MFIs- in general- should have all the seven important institutional properties to be considered as an ideal savings institution. With regards to the microfinance sector in Bangladesh, this study supports that all the NGO-MFIs have these properties to be considered as an ideal deposit taker. Conclusions - The microfinance sector in Bangladesh needs to design and develop comprehensive and customer friendly savings products to further motivate the poor to save in MFIs.

Interest Rate Caps in Microfinance: Issues and Challenges

  • Mia, Md Aslam
    • The Journal of Industrial Distribution & Business
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    • v.8 no.3
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    • pp.19-22
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    • 2017
  • Purpose - To control exorbitant interest rates, implementation of an interest rate ceiling is a standard practice in microfinance. However, there are pros and cons of such market intervention. Hence, the aim of this short note is to highlight issues and challenges regarding the interest rate cap in microfinance, both from the perspective of clients and institutions. Research design, data, and methodology - While the nature of this short note is explanatory and descriptive, the research methodology used relevant data from the MixMarket and Microcredit Regulatory Authority (MRA) annual reports in Bangladesh. Results - We argue that an interest rate ceiling is detrimental both for the clients and microfinance institutions (MFIs). This market intervention substantially reduces the outreach of MFIs and clients are most likely to pay a higher price in the long-run. Additionally, an interest rate cap also puts severe pressure on new-born and high-cost MFIs to cope with the interest rate ceiling. Conclusions - Although market intervention may be necessary in the short-run, it should not be the ultimate solution to abate high interest in microfinance. Understanding the operational dynamics of MFIs, as well as promoting productivity, efficiency and competition could help to lower the interest rates.