Factors Effecting The Elasticity Of Micro Credit Demand In Southern Punjab, Pakistan

Shazma Razzaq; Nadeem Maqbool; Waseem Ul Hameed

doi:10.36923/ijsser.v1i2.34

Shazma Razzaq ⁽¹⁾ , Nadeem Maqbool ⁽²⁾ , Waseem Ul Hameed ⁽³⁾

(1) National College of Business Administration and Economics (NCBA&E), Pakistan. Email: shazmarazzaq4@gmail.com , Pakistan

(2) Department of Management Sciences, Islamia University of Bahawalpur, Pakistan. Email: nadeemmaqbool90@yahoo.com , Pakistan

(3) Department of Management Sciences, Islamia University of Bahawalpur, Pakistan. Email: expert_waseem@yahoo.com , Pakistan

https://doi.org/10.36923/ijsser.v1i2.34

Issue
Vol. 1 No. 2 (2019)

Submitted
May 23, 2019

Published
October 18, 2019

Keywords:

Government Policies, Gender Differences, Microfinance Institutions, Microcredit, Transaction Cost

View PDF

Abstract

Purpose of the study: Microfinance institutions (MFIs) are delivering various services of microcredit, savings as well as insurance. The key objective of microcredit is to decrease the poverty level and for empowering the women as well as other poor people under various developing countries. There is the various factor which effects on the demand of microcredit. Therefore, the objective of the current study is to explore the factors which affect the demand for microcredit.

Methodology: In this conceptual study, the qualitative research technique was used. The data were collected from previous research studies and companies’ websites.

Main Findings: It is concluded that numerous factors may influence the demand for microcredit by the various borrowers. These comprise the interest rate, the relationship between lenders as well as borrowers, different government policies, gender differences, prospective beneficiaries, the creditworthiness of the borrower, transaction cost, limited access to credit, economic condition and the availability of information.

Applications: This helps analyze the barriers which the borrower and lender must face in operating the microcredit. In this way, microfinance institutions can take help from this study by considering these factors during the distribution of credit.

Novelty/Originality: The findings of this research study fulfilled the theoretical gaps in the literature by identifying the different fact which may help to revise the poverty level. Future research studies may focus on these factors, which may help to increase the economy and reduce poverty in southern Punjab, Pakistan.

Full Article

Generated from XML file

References

Al-Shami, S. S. A., Majid, I. B. A., Rashid, N. A., & Hamid, M. S. R. B. A. (2014). Conceptual framework: The role of microfinance on the wellbeing of poor people case studies from Malaysia and Yemen. Asian Social Science, 10(1), 230.

Anggraeni, L, (2009), “Factors influencing participation and credit constraints in a remote rural area Case of ROSCA and ASCARA in JAVA”, Journal of Applied Sciences 9(11), Pg: 2067-2077.

Bakhshoodeh, M., & Karami, A. (2008). Determinants of poor accessibility to microcredits in rural Iran. In International Conference on Applied Economics (pp. 67-71).

Beisland, L. A., D’Espallier, B., & Mersland, R. (2019). The commercialization of the microfinance industry: Is there a ‘personal mission drift’among credit officers?. Journal of Business Ethics, 158(1), 119-134.

Chakravarty, S., & Shahriar, A. Z. (2010). Relationship Lending in Microcredit: Evidence from Bangladesh (No. 1003).

Chaudhuri, B. R. (n.d.). Demand and Supply Factors in the Regional Disparity of Micro Credit in India. Indian Institute of Foreign Trade, Pp 1-30. https://www.rug.nl/research/globalisation-studies-groningen/research/conferencesandseminars/conferences/eumicrofinconf2011/papers/10b.chaudhuri.pdf

Conroy, J. D. (2002). Microfinance in Malaysia: A Time to Rebuild. Foundation for Development Cooperation.

Delfiner, M., & Peron, S. (2007). Commercial banks and microfinance, Pp 1-53. https://mpra.ub.uni-muenchen.de/10229/1/MPRA_paper_10229.pdf

Diagne, A. and M. Zeller, 2001. Access to Credit and its Impact on Welfare in Malawi. IFPRI Research Report, No. 116.

European Commission (2007a). Expert Group report: The Regulation of Microcredit in Europe, Enterprise Industry, Brussels.

Fenton, A., Paavola, J., & Tallontire, A. (2017). The role of microfinance in household livelihood adaptation in Satkhira District, Southwest Bangladesh. World Development, 92, 192-202.

Hameed, U.W., Mohammad, H., & Shahar, H. K. (2018). Pursuing goal of self-sustainability but leads towards more instability: Challenges and way forward of self-help groups (SHGs). International Journal of Business and Tehnopreneurship, 8(1), 67-76.

Hameed, W.u., Imran, M., ?lusarczyk, B., & Haque, A. U. (2019). The Moderating Role of Malaysian Government in Microcredit organization and Quality of Women Self-Sustainability. Calitatea, 20(S1), 481-486.

He, G. W. (2007). The diversities and strategy of China rural financial institutions. The Observation of China Rural Finance, 12-20.

Helms, B., & Reille, X. (2004). Interest rate ceilings and microfinance: The story so far CGAP (Consultative Group to Assist the Poorest) Occasional Paper no. 9. World Bank, 227-239.

Hoque, Seerajul (2008), Does Micro credit Programs in Bangladesh Increase Household ability to Deal with Economic Hardships (www.mpra.ub,unimuenchen. de/6678/ (accessed on 14 April 2008).

Karlan, S., & Zinman, J. (2008). Credit Elasticities in Less-Developed Economies:Implications for Microfinance. 98, 3, 1040–1068.

Llanto, G. M. (2003). A Microfinance Promise: To Give the Poor Access to Finance Services. PIDS Policy Notes, (2003-06).

Mcloughlin, C. (2013). Helpdesk Research Report: Impact of microcredit interest rates on the poor. Governance and Social Development Resource Centre, Pp1-12.

Mead, C.D., & Liedholm, C. (1998). The dynamics of micro and small Enterprises in developing countries. World Development, 26(1), 61-74.

Morduch, J. (1999). The microfinance promises. Journal of economic literature, 37(4), 1569-1614.

Nawai, N., & Shariff, M. N. M. (2010). Determinants of repayment performance in microcredit programs: A review of literature. International Journal of Business and Social Science, 1(2) 251-161.

Otero, M. (1999). Bringing development back, into microfinance. Journal of Microfinance/ESR Review, 1(1), 8-19.

Rashid, A. and Ejaz, L. (2019), "Interest free micro credit loans: Pakistani female entrepreneurs", Journal of Islamic Marketing, Vol. 10 No. 3, pp. 860-873. https://doi.org/10.1108/JIMA-04-2018-0071

Robinson, M. (2002). The Microfinance Revolution: Sustainable Finance for the Poor. The World Bank. Washington, D.C. 38.

Roslan, A.H., Faudziah, Z.A., Mohd Saifoul, Z.N., & Rahimah, M. (2007). Microfinance service for microenterprise: Good practices and performance of selected microfinance institutions in Malaysia. Journal of Yala Rajabhat University, 2(1), 31-45.

Saleh, S.A., & Ndubisi, O.N. (2006). An evaluation of SME development in Malaysia. International Review of Business Research Papers, 2(1), 1-14

Taj, S., Akmal, N., Shah, N. A., Ahmad, S., & Saddozai, K. N. (2008). Gender Involvement In Small Enterprises Through Micro-Credit In Rainfed Pothwar. Sarhad J. Agric, 24, 4, 779-784.

UL Hameed, W., Nisar, Q. A., Abbas, A., Waqas, A., & Meo, M. S. (2019). Microfinance Institutions as a Strategic Tool to Enhance Women's Career Development in Pakistan. ASIAN WOMEN, 35(2), 93-128.

Ul-Hameed, W., Mohammad, H., & Shahar, H. (2018). Microfinance institute’s non-financial services and women-empowerment: The role of vulnerability. Management Science Letters, 8(10), 1103-1116.

Van Bastelaer, T. (2000). Imperfect information, social capital and the poor’s access to credit: a review of the literature. Mimeo. IRIS, University of Maryland.

Von Pischke, J.D. and D.W. Adams, 1980. Fungibility and the Design and Evaluation of Agricultural Credit Projects. American J. Agric. Econ., 62: 719–726

Waheed, S. (2009). Does Rural Micro Credit Improve Well-Being Of Borrowers In The Punjab (Pakistan), Pakistan Economic and Social Review, 47(1), 31-47.

Webster, L., & Fidler, P. (Eds). (1996). the Informal Sector and Microfinance Institutions in West Africa. World Bank. Washington. 21-42.

Authors

Shazma Razzaq

National College of Business Administration and Economics (NCBA&E), Pakistan. Email: shazmarazzaq4@gmail.com

shazmarazzaq4@gmail.com (Primary Contact)

Nadeem Maqbool

Department of Management Sciences, Islamia University of Bahawalpur, Pakistan. Email: nadeemmaqbool90@yahoo.com

Waseem Ul Hameed

Department of Management Sciences, Islamia University of Bahawalpur, Pakistan. Email: expert_waseem@yahoo.com

Shazma Razzaq, Nadeem Maqbool, & Waseem Ul Hameed. (2019). Factors Effecting The Elasticity Of Micro Credit Demand In Southern Punjab, Pakistan. Innovation Journal of Social Sciences and Economic Review, 1(2), 46–53. https://doi.org/10.36923/ijsser.v1i2.34

Download Citation

This work is licensed under a Creative Commons Attribution 4.0 International License.

IJSSER is committed to an open-access model for publishing, ensuring that all of its content is freely available under the terms of the Creative Commons Attribution License (CC BY) 4.0. This policy empowers researchers, academicians, and the general public to freely download, copy, print, and access the links to the full texts of published materials at no cost. Furthermore, authors are encouraged to read, distribute, and submit the published works to their institution's library and any other appropriate repositories.