Essay on Debatable Topics in Microcredit: Interest Rates

In Laurie Anderson’s book Speak, Melinda sordino is the protagonist. The author foreshadows Melinda’s life throughout high school. Before high school, Melinda is raped by a beast named Andy Evans. This causes Melinda to go mute her whole freshman year, where she talks to no one. This was until Anderson uses symbols to explain key parts of the story with a deeper meaning. The author uses many signs of extensive detail in symbols from the use of art projects, a mirror, and a front yard,which helps explain why Melinda was mute and how the author precisely described Melinda’s life.

Background: For years since the rise of microfinance in the contemporary discourse of development, Chotacredit, a nationwide Microfinance institution, has been playing a leading role in the XXX region in providing accessible finance to low-income households as a catalyst for employment creation, poverty reduction, and gender equality. However, in recent practice, Chotacredit has found that the current loan-signing rule which requires co-signature by spouse may potentially limit female participation in the microloan program and program impact. A few valid assumptions have been made: 1. As currently, a loan contract must be co-signed by both husband and wife, and a significant share of the husbands of our female clients are truck drivers, the

high street banks and building societies). Consequently the financially excluded rely on range of informal solutions and ‘sub-prime’ providers. This has three negative effects: 1. Inability to access many services that now operate entirely beyond a cash based economy. 2. The banking sector is highly regulated with extensive consumer safeguards. Unfortunately similar protection is not always available when using subprime providers. 3. Most perniciously, the cost of credit varies enormously with APR rates from around 14% for a bank loan, to upwards of 177% for a small cash loan from a doorstep lender. It reduces families’ disposable income, which in turn reduces their children’s life chances, and thus cuts the amount spent with local shops and businesses. In addition to undermining existing micro-entrepreneurs, the lost money reduces the capacity of potential entrepreneurs to start businesses. This latent entrepreneurship is highlighted in the report, with 20% of those surveyed in deprived communities interested in affordable loans for business start-ups.

My PGEs have had direct and indirect impacts on student learning. As a Transition Coordinator, I was able to have a direct impact on my students through relationship and confidence building. These activities built a positive attendance pattern and created a love for learning, helping them immediately when the school year started. I had an indirect impact of (on) their future learning by educating their parents and sharing community resources with them. With my M.Ed. in TESOL and Bilingual Education, I had a direct impact on student learning using sheltered instruction strategies that allow my students to learn content as they build language. Through my participation on the Early Childhood Task Force, I have a huge indirect impact on student learning for every early childhood student in my district by establishing developmentally appropriate best practices for all classrooms. As a Title I Reading and Math Coach, I have an indirect impact on every student in my building (almost 1,000 students)! I am able to help teachers realize their full potential, which increases student engagement and learning in all areas.

It is also important to recognize how many low-income families are unable to escape poverty due to the lack of protection from the hidden implicit fees or “poverty taxes” that burden those struggling financially. Many of these costs stem from the practices of payday lenders who capitalize on the impoverished and their inability to procure loans from traditional banks. When needy individuals possess poor credit scores or lack ample savings, their inadequate financial histories prevent them from taking out loans from conventional banking institutions. Consequently, when a situation arises where an immediate credit-blind loan is required, they are forced to turn to these independently run subprime lenders and their excessively high interest rates.

Today’s financial crisis has deeply impacted all areas of life not only in the United States, but also the rest of the world. Company giants such as Circuit City® and Merrill Lynch® have fallen victim to the financial crisis. One of the biggest industries the financial crisis has had an impact on has been the housing market. Everyday newspapers, journal articles, and television media cover stories regarding foreclosures around the country. To regain financial control of the world and domestic economy, one must begin with the housing market. There are various areas of the housing market, which allow for overhaul and maintain a prosperous future. Regulating bank interest rates and federal interest rates will reduce, if not eliminate the

Muhammad Yunus, Founder of the Grameen Bank is often hailed as the architect of microfinance lending and has been praised around the world for his work and even awarded the Nobel Peace prize in 2006. The concept of microfinance is to lend small portions of money to poor people who could not have otherwise acquired a loan from a regular bank. Microfinance banks give the poor a small loan with incredibly high interest rates in the hope that the borrower will create a business or some form of income creating venture to sustain themselves and pay back their loans. Not only is that person left with a way to support themselves, but it also creates jobs in the community. These banks have noticed that when the money was lent to a family through the woman of the household, it went a longer way than if the man of the household received the loan. Yunus has noticed even within the Grameen Bank that “Poor women [have] an amazing skill, the skill of managing a scarce resource.” (12) Studies have shown that if a mother is receiving income the first beneficiaries are her children. The effects of this are amazing, many communities have seen a rise in school enrollment and improved child survival rates because women are more likely to spend money on food for their children and health care than are fathers. There is a saying, “If you give a man a fish, he will eat

Microcredit undoubtedly is easily sustainable to the public. For example suppose you had poor credit or no credit at all, you can still receive a lone (The Pros and Cons of Microloans). Because of this anyone can get a small lone. This show that no matter their position, microfinance can help. In addition the program targets under privileged citizens (What are the pros and cons of microfinance?). This shows that microcredit can help people in the toughest situations. As a result people can provide better for themselves and their family. However some claim borrowers can’t make a living because people can’t afford to pay back lones. Lastly microcredit is used all over the

Introduction We had a debate in the classroom about how we should/should not have phones during class time. For me I think we should not have a phone in class time. I will be telling why and why not. By the way when we did the debate the side that won was the one that was debating on having phones.

The generation of self-employment in non-farm activities requires investment in working capital. However, at low levels of income, the accumulation of such capital may be difficult. Under such circumstances, loans, by increasing family income, can help the poor to accumulate their own capital and invest in employment-generating activities (Hossain, 1988). Commercial banks and other formal institutions fail to cater for the credit needs of smallholders, however, mainly due to their lending terms and conditions. It is generally the rules and regulations of the formal financial institutions that have created the myth that the poor are not bankable, and since they can’t afford the required collateral, they are considered uncreditworthy (Adera, 1995). Hence despite efforts to overcome the widespread lack of financial services, especially among smallholders in developing countries, and the expansion of credit in the rural areas of these countries, the majority still have only limited access to bank services to support their private initiatives (Braverman and Guasch, 1986). In the recent past, there has been an increased tendency to fund credit programmes in the developing countries aimed at small-scale enterprises. In Kenya, despite emphasis on increasing the availability of credit to small and microenterprises (SMEs), access to credit by such enterprises remains one of the major constraints they face. A 1995 survey of small and

From a structural perspective, however, the potential for growth across most microfinance markets is vast as financial exclusion remains widespread. In spite of the rate of financial inclusion progressing rapidly in the last decade, a large gap is observed between developing and developed countries. For instance, while the ratio of 1 Adams, T. (2016). Banks are driving financial inclusion. Livemint. Retrieved from http://www.livemint.com/Opinion/ qOHHqoPRYbjkywASoqeQ0K/Banks-are-driving-financial-inclusion.html (accessed on 09/11/2016) 2 World Bank. (2016). Financial inclusion – Overview. Retrieved from http://www.worldbank.org/en/topic/financialinclusion/ overview (accessed on 09/11/2016) 3 responsAbility (2016). Microfinance market outlook: Developments, forecasts, trends. Retrieved from http://sanabelnetwork.org/UserFiles/file/Conf%20publications/rA_Microfinance%20Outlook_2016.pdf private credit to GDP in countries with large microfinance markets (developing and underdeveloped countries) hovers at around 40%, in developed countries, this indicator lies well above 100%.3 This gap implies that the microfinance sector still has plenty of room to ‘catch up’, allowing it to outpace growth levels in more mature segments of the economy for the foreseeable future. However, this is not true of all microfinance markets. In some countries—for instance, Peru—financial markets have expanded at

Integrated micro financial services through the development of saving-loans Cooperatives (Credit Unions) and Rural Banks (BPR)

Supporting research for that is not always conclusive. Economic journalist, Nicholas D. Kristof, asserts that an increase in savings rate by recipients of micro-loans is attributed to the large difference microfinance makes than simply the process of lending.

The problem with the current state of micro-banks and credit card companies is the amount of the fees and interest charges they are charging, usually to consumers who are poor and low wage earners, who desperately seek out these alternatives to take care of their financial needs. These practices leave them in a more desperate state because the extortionate fees, making it impossible to stay current on their payments, by driving disadvantage consumers in deeper debt. Some of these companies charge high percentage rates, and being late on

In this documentary, Tom Heinemann (the director) provides a sharp critique of microfinance in the world. The documentary pertains critically to the work of Muhammad Yunus and the Grameen Bank in Bangladesh. Tom Heinemann tells an unpopular and confronting story about how microfinance, although innovative, leaves few to prosper and the many poor being financially “strapped”. This documentary has caused a flood of criticism about microfinance, while diminishing the reputation of Grameen Bank’s founder, Muhammad Yunus. I feel that The Micro Debt does not shed the full light onto microfinance, yet it is becoming increasingly hard to ignore its effects.