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Among all paths to poverty alleviation, Micro Finance has proved it an effective one. First launched around two decades ago in Bangladesh, Micro Finance is the major financial mechanism in developing countries, providing essential financial services to millions of farmers, shopkeepers, and small entrepreneurs and improving their economic status substantially. In addition, Micro Finance is not only philanthropical but also profitable: in general, the recovery rate of loans provided by Micro Finance Institutions(MFIs) is higher than that of banks, even MFIs require a higher premium.
Yet Micro Finance is no magic bullet. Although MFIs play a similar role to banks, they can not function as fully as banks. Both MFIs and banks provide essential financial services for individuals and businesses, which consequently facilitates economic development. Unlike banks, however, MFIs are isolated in a small region and rely mostly on donation. Furthermore, while banks have numerous options of savings and loans for their clients, most MFIs can provide only term deposits and loans, limiting their capability to capital accumulation and resource distribution.
Such capacity may be sufficient when the economic development is at initial phase, but the economy of developing countries has changed vastly in recent years. For example, India had been trapped in extreme poverty for decades. After industry deregulation and approval of foreign direct investment in 1990’s, the GDP per capita jumped from $326 in 1992 to $434 in 1997, and reached a record of $784 in 2006. Yet the fruit of economic advancement is not evenly distributed. In an article in its publication in August, The Economist warned that “in some Asian countries, expenditure figures may understate the true extent of inequality......in India's richest state 99.8% of the population has access to clean water, but only 2% does in the poorest.” Obviously, the biggest problem in developing countries right now is economic equality rather extreme poverty. If Micro Finance keeps isolated from the monetary system, the problem of economic inequality will worsen. Shop keepers and micro entrepreneurs in developing countries, whose businesses have been so strong that MFIs alone can no longer satisfy their demand, may seek loans from normal banks. However, their request will very likely be denied, because they are still “unbankable”: they have no credit records or limited real estate and are even illiterate. Eventually, these business activities will be confined to a grass-root level, which stops the overall economic development and increases the gap between the rich and the poor.
Therefore, we should redefine the goal of Micro Finance as to reduce economic inequality. Compared with government policies, which often emphasize large scale development, Micro Finance puts its focus on rural area and underprivileged people; besides, because of their localization, MFIs are more familiar to the nearby region than are normal banks, which is an advantage to further their impacts. Consequently, if we can enforce their capability, MFIs will be a powerful tool in overall economic development, and the inequality problem will gradually be solved.
To enforce their capability, MFIs should be fully integrated into current monetary system. Firstly, we should design a set of feasible financial auditing principle for MFIs to truly disclose their financial performance; secondly, the government should propose a specific law for MFIs, giving it a legitimste status; and thirdly, MFIs, like banks, should have a bailout such as the central bank.
Micro Finance has indeed made changes happen. However, as new challenges emerge, weshould renovate this great invention, making it more competitive. It is our inevitable obligation to the world.
這個是英文版的MF，內容比較像論文，是申請學校用的。
也算是個心血結晶就是了。
Yet Micro Finance is no magic bullet. Although MFIs play a similar role to banks, they can not function as fully as banks. Both MFIs and banks provide essential financial services for individuals and businesses, which consequently facilitates economic development. Unlike banks, however, MFIs are isolated in a small region and rely mostly on donation. Furthermore, while banks have numerous options of savings and loans for their clients, most MFIs can provide only term deposits and loans, limiting their capability to capital accumulation and resource distribution.
Such capacity may be sufficient when the economic development is at initial phase, but the economy of developing countries has changed vastly in recent years. For example, India had been trapped in extreme poverty for decades. After industry deregulation and approval of foreign direct investment in 1990’s, the GDP per capita jumped from $326 in 1992 to $434 in 1997, and reached a record of $784 in 2006. Yet the fruit of economic advancement is not evenly distributed. In an article in its publication in August, The Economist warned that “in some Asian countries, expenditure figures may understate the true extent of inequality......in India's richest state 99.8% of the population has access to clean water, but only 2% does in the poorest.” Obviously, the biggest problem in developing countries right now is economic equality rather extreme poverty. If Micro Finance keeps isolated from the monetary system, the problem of economic inequality will worsen. Shop keepers and micro entrepreneurs in developing countries, whose businesses have been so strong that MFIs alone can no longer satisfy their demand, may seek loans from normal banks. However, their request will very likely be denied, because they are still “unbankable”: they have no credit records or limited real estate and are even illiterate. Eventually, these business activities will be confined to a grass-root level, which stops the overall economic development and increases the gap between the rich and the poor.
Therefore, we should redefine the goal of Micro Finance as to reduce economic inequality. Compared with government policies, which often emphasize large scale development, Micro Finance puts its focus on rural area and underprivileged people; besides, because of their localization, MFIs are more familiar to the nearby region than are normal banks, which is an advantage to further their impacts. Consequently, if we can enforce their capability, MFIs will be a powerful tool in overall economic development, and the inequality problem will gradually be solved.
To enforce their capability, MFIs should be fully integrated into current monetary system. Firstly, we should design a set of feasible financial auditing principle for MFIs to truly disclose their financial performance; secondly, the government should propose a specific law for MFIs, giving it a legitimste status; and thirdly, MFIs, like banks, should have a bailout such as the central bank.
Micro Finance has indeed made changes happen. However, as new challenges emerge, weshould renovate this great invention, making it more competitive. It is our inevitable obligation to the world.
這個是英文版的MF，內容比較像論文，是申請學校用的。
也算是個心血結晶就是了。
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