Microfinance Paper essay sample

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In the case “Microfinance”, the strategy of providing the poorest people (mostly entrepreneurs) with small loans with high-interest rates.

The major stakeholders in the case the banks, who provide funding, investment companies and the loaners. The stakeholders’ concerns are mostly about maintaining the life cycle of the loans and financing the bank, and to provide the loans to the most efficient groups of clients. To consider if one of the stakeholder groups is more important than another, I think that none of them is more important than others, since every stakeholder is important part of the chain.

Considering the fact that the banks need resources to grow, it is noteworthy to detect competitive strategy which microfinance utilizes. It seems that the bank is balancing between providing loans and investing money in the development. Speaking about the options of the bank to deal with the life cycle issues, it could be setting harsh limits for the loans and minimum necessary amount of funds allocated for the growth, or providing the insurance of their funds.

In regard of this case, the challenges faced by the leadership of both Grameen and Banco include mostly the inability or unwillingness of the clients to return the loan, and to deal with that risk the banks often give the loans to groups instead of individuals. Another potential problem is dealing with the falling profits without harming the poorest stakeholders of the bank.

Finally, to speak about the corporate governance mechanisms which could be involved in the case of microfinance, I believe they should be harmonized and flexible, namely allow the poor stakeholders to get profit from their participation, since it will encourage them to be more responsible and active in …

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Tags: case, bank


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