Final Project Murthy5

7/24/2019 Final Project Murthy5

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Micro Finance in India: proceedings of national conference [Kindle Edition],

www.amazon.in, Amazon Digital Sot! Asia Ser"ices, Inc, ASI#: $%&'(D)*+M

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Microfinance has become increasingly popular as a tool for poverty reduction in developing andtransition countries. The major challenge before developing countries is how to improve living

standards of the poor. Microfinance has been chosen to shoot this problem. But, the question of

how far microfinance is successful in improving living standards of the rural poor is still

unanswered. It is in this context a research has been initiated to now the role of microfinance inimproving living standards of the rural poor. Microfinance institutions are encouraging the self

help groups to mobili!e savings and turning the rural poor into income generating

entrepreneurs.

This study aims at understanding the role of microfinance in improving living standards of the

rural poor through self help groups. " questionnaire using liert type scale has been designedand executed to now whether the living standards have been improved through support of

microfinance. The respondents have been selected on random basis covering selected rural areas

of #isahapatnam on all the beneficiary of the microfinance through $%&s. 'esponses toquestions, such as increase in income, increase in savings, access to better health, access to

better education, and improved financial position, have been sought to now whether their living

standards have improved. Most of the respondents expressed their favorable response and did

mention that microfinance through $%&s had helped them to a certain extent and also improvedtheir living standards, the study also explored that few of the respondents were not fully aware

the details of the program and is still relying on their group leaders instructions, which seems to

be a bottle nec for their future endeavors.

* Mr. R.L.N.MURTHY, research scholar, Gitam University, Visakhapatnam**Proessor P. !H""L#, proessor $ept o %inance, G&T#M &nstit'te o Mana(ement, G&T#M University, Visakhapatnam.


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I#0-D*/0I-#

Microinance is a inancial service provi)e) y micro inance instit'tions to the poor thro'(h

either )irectly or (ro'p mechanism, the main aim o the microinance is poverty re)'ction

thro'(h empo+erin( the r'ral poor an) +omen. &t oers vario's services s'ch as provi)in(collateral ree micro cre)it, (ro'p len)in( savin(s poolin( an) ins'rance service. &t is oten

ar('e) that M%&s char(e hi(h rate o interest they char(e ao't - o interest 't the act is that

these M%&s are orro+in( rom anks at /0 to /1 an) 2 to /3 is the operatin( cost.

Ho+ever, china, Vietnam, an) !o'th 4orea achieve) r'it'l res'lts in rin(in( )o+n the

poverty level thro'(h the ma(ical mechanisms o microinance. Microinance has (aine)

pop'larity since proessor Mohamme) Y'n's +ho is the pioneer o microinance tho'(ht create)+on)ers in 'plitin( the livin( stan)ar)s o the poor in 5an(la)esh.

Microinance instit'tion are really playin( key role in poverty re)'ction. These M%&s are thevital so'rces or the poor to orro+ collateral ree loans. These loans meant or 'plitin( o poor

y inc'lcatin( entreprene'rial ship. &n &n)ia, microinance instit'tions provi)e their services

either )irectly or (ro'p ase). Most o the M%&s are enco'ra(in( sel help (ro'ps to provi)emicro cre)it. The reason ehin) the act is to make the memers eel (ro'p responsiility. 5y

enco'ra(in( (ro'ps savin( moili6ation also ecomes easy sel help (ro'ps are s'ch (ro'ps

mainly )ominate) y emales, that save small amo'nt o money an) memers can orro+ rom

common pool on a rotatin( asis these !HGs are sometimes 'se) y M%&s or (ro'p len)in(.Gro'p memers are ma)e a+are o the p'rpose o (ro'p ormation, p'rpose o len)in(,

repayment )'ration, terms o repayment, an) interest char(e). &t is 's'ally e7pecte) that the

memers are repayin( rom the savin(s (enerate) rom their entreprene'rial activity. &t is onlythen the poverty re)'ction an) 'plitin( o livin( stan)ar)s o the poor is possile thro'(h

microinance.

&n or)er to e7amine +hether the stan)ar) o livin( improve) amon( the poor there are several

in)icators that come han)y. &ncrease) savin(s increase) income, improve) healthcare ,improve)

e)'cation, etter )ecision makin( are the most vital in)icators in e7aminin( the impact o themicroinance on the livin( stan)ar)s o the poor.

Many co'ntries, )evelope), )evelopin( an) transition co'ntries, have emrace) the concept o

microinance. M%&s provi)e +i)e ran(e o services. The kno+n activity o M%&s is provi)in(cre)it to poorer ho'sehol)s M%&s are not e8'ally )isperse) +orl)+i)e. They appear to e

especially +ell )evelope) in certain #sian an) Latin #merican co'ntries, s'ch as 5an(la)esh,5olivia, an) &n)onesia 9&M% +orkin( paper +p:3:/;< =Microinance instit'tions an) p'licpolicy>?. This st')y aims at in)in( o't +hether microinance is really s'ccess'l in improvin(

livin( stan)ar)s o the r'ral poor thro'(h !HGs.


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-$8E/0I3ES -F 01E S0*D5

The prime o@ective o the st')y is to kno+ the impact o microinance in improvin(

livin( stan)ar)s o the r'ral poor thro'(h !HGs. To kno+ +hether there e7ist a relationship et+een income increase an) savin( increase

ater availin( micro inance acility.

To kno+ +hether there e7ists a relationship et+een income increase an) role in )ecision

makin( process increase) ater availin( microinance acility.

To kno+ +hether there is a relationship et+een improve) stan)ar)s o livin( an)

increase in income, increase in savin(s, etter access to e)'cation, etter access to health

care an) improve) inancial position o amily ater availin( microinance acility.

To kno+ the a+areness amon( the microinance 'sers ao't the p'rpose an) terms o

micro cre)it an) repayment.

IMI0A0I-#S -F 01E S0*D5

This st')y mainly con)'cte) in r'ral areas o Visakhapatnam. Henceorth, the res'lts o

this st')y are applicale to r'ral areas o Visakhapatnam only.

This st')y is mainly ase) on primary )ata, +hich is otaine) thro'(h a 8'estionnaire.

The acc'racy is lar(ely )epen)ent on the acc'racy o the responses (iven y therespon)ents.

ME01-D--25

Data collection

$ata has een collecte) rom primary an) secon)ary so'rces.

Primary )ata has een collecte) y employin( a str'ct're) 8'estionnaire an) a)ministerin( that8'estionnaire co'ple) +ith ace to ace intervie+ +ith the respon)ents elon( to vario's villa(es

o Visakhapatnam )istrict.

The 8'estionnaire consists o vario's 8'estions on respon)ents proile their a+areness ao't thep'rpose o loan provi)e), terms o loan repayment )'ration an) interest char(e). &t also consist

8'estions on their arran(ement to repay the loan an) their satisaction +ith the loan processin(

y their (ro'p lea)er.

The likertAtype scale has een incorporate) in the 8'estionnaire +hich consists ; points ran(in( /

or stron(ly )isa(ree to ; or stron(ly a(ree +ith 0 as a ne'tral point.

!econ)ary )ata, ao't previo's st')ies, an) literat're revie+ on microinance has een otaine)

rom vario's national an) international @o'rnals an) +esites.

Sample size


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# sample o /3 respon)ents +ho availe) microinance acility, has een otaine) on ran)om

asis co'ple) +ith convenience samplin(. #n) the )ata has een analy6e) +ith !P!! 3.

iteratre re"iew

Microinance is a po+er'l tool in improvin( livin( stan)ar)s o the r'ral poor. &t enco'ra(es

savin(s an) inc'lcates entreprene'rial attit')e amon( the 'nemploye) poor. &t enco'ra(es (ro'presponsiility +hich helps the poor in achievin( economic )evelopment. The reserve ank o

&n)ia 9R5&? an) national ank or a(ric'lt're an) r'ral )evelopment 9N#5#R$? )eine

microinance as =provision o thrit, cre)it an) other inancial services an) pro)'cts o verysmall amo'nts to the poor in r'ral semiA'ran areas or enalin( them to raise their income levels

an) in improvin( livin( stan)ar)s.

Poor ho'sehol)s ace many constraints in tryin( to save, invest, an) protect their livelihoo)s.They take inancial interme)iation serio'sly an) )evote consi)erale eort to in)in( +orkale

sol'tions. Most o the sol'tions are o'n) in the inormal sector, +hich, so ar, oers lo+Aincome ho'sehol)s convenience an) le7iility 'nmatche) y ormal interme)iaries. Themicroinance movement is strivin( to match the convenience an) le7iility o the inormal

sector, +hile a))in( reliaility an) the promise o contin'ity, an) in some co'ntries it is alrea)y

)oin( this on a si(niicant scale. 9 Bonathan Mor)'ch an) !t'art R'theror) #pril /, 330?

Microinance accor)in( to Ctero 9/


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&t is +i)ely accepte) that micro inancin( plays a very important role in improvin( the livin(

con)itions o the poor y makin( it possile or the poor to have access to pro)'ctive reso'rces

+ith inancial services ein( a key reso'rce. 9Eilliam Gariel 5ra'A&nsai)oo an) %er)inan)#hiakpor?

Microinance is consi)ere) as a tool or socioAeconomic )evelopment. &t is one +ay o i(htin(poverty in r'ral areas +here the poorest people live. &t p'ts cre)it, savin(s, ins'rance an) other

asic services +ithin the reach o poor people. 9Mrs.T.Jhan)raai, $r.4.Venkata @anar)han rao,

Mr.!'resh 4an)'lapati?

Hi(hA8'ality microinance is characterise) y services that are easily accessile to the poor,

responsive to the 'll ran(e o their inancial nee)s an) reasonaly price).9 4ieran $ona(h'e an)!tav Fotalis, #'s#&$?

SEF 1E( 2-*(S

!el Help Gro'ps are Gro'p ase) inancial service mo)els have capt're) the attention o

)evelopment practitioners aro'n) the +orl). 9!ocial interme)iation an) microinance pro(rams.9# literat're revie+ y "laine e)( com an) la'ra arton, av( /


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ri(hts, i(htin( a(ainst the social evils s'ch as (en)er ias, chil) lao'r, violence a(ainst +omen,

secon)ary stat's assi(ne) to +omen, )o+ry, crimes a(ainst +omen etc.9 N. Manimekalai?

0A$E #-: & (-FIE -F 01E ES(-#DE#0S


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V#RL" M"#!UR&NG GRCUP re8'ency percenta(e

a(e

3A03 ; 3.-3

03A13 1 0;.33

13A;3 10 0;.-3

;3A3 /3 -.03

Total /3 /33.33

(en)er

emale 20 3.-3

male 12 0


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0a9le no &provi)es the inormation ao't the )emo(raphic proile o respon)ents. Most o the

respon)ents all et+een the a(e (ro'ps o 03A13 an) 13A;3 years. #n) these t+o (ro'ps

to(ether constit'te 23.- o the total respon)ents. Most o these are o'n) to e mi))le a(e)people. %emales are the )ominatin( 'sers o microinance acility an) they are 3.- an) males

+ere 0


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0a9le no sho+s loan )etails o respon)ents. Lar(e percenta(e Respon)ents are satisie) y

+ay o loan processin( an) that is 23.-. Most o the respon)ents availe) microinance acility

or more than t+ice an) they are 1


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15(-01ESES 0ES0I#2

EA0I-#S1I( $E0;EE# 01E I#/EASE -F I#/-ME A#D 01E I#/EASE -F

SA3I#2S1%&:there is no relationship et+een increase in income an) increase in savin(s ater availin(

microinance acility

1a&:there is a relationship.

/orrelations

The income has The savin(s has

The income hasincrease)

Pearson / .2;;**

!i(. 9/A .333

N /3 /3

The savin(s hasincrease)

Pearson .2;;** /!i(. 9/A .333

N /3 /3

**. Jorrelation is si(niicant at the 3.3/ level 9/Ataile)?.

%rom the aove correlation tale it is si(niicant +ith 3.2;; at 3.3/ level. !o, n'll hypothesis has

een re@ecte) an) alternative hypothesis is accepte). &t means there is a si(niicant relationship

e7istin( et+een increase in income an) increase in savin(s. !o, M%&s are s'ccess'l in savin(

moili6ation.

E2ESSI-# A#A5SIS $E0;EE# I#/EASE -F I#/-ME A#D -E I#

DE/ISI-# MAKI#2 (-/ESS

1%: there is no relationship et+een income increase) an) role in )ecision makin( processincrease.

1a:there is a si(niicant relationship

3aria9les Entered


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. #ll re8'este) variales entere).

Model Smmar7

Mo)el R R !8'are #)@'ste)

R !8'are

!t). "rror

o the

"stimate

Jhan(e !tatistics

R!8'are

Jhan(e

% Jhan(e )/ ) !i(. %Jhan(e

/ .1-1a .01 .- /.3-;/ .01 0./3/ / //- .333

a. Pre)ictorsI 9Jonstant?, The income has increase)

A#-3Aa

Mo)el !'m o

!8'ares

) Mean

!8'are

% !i(.

/ Re(ression 1.;/ / 1.;/ 0./3/ .333

Resi)'al /0-.


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A#-3Aa

Mo)el !'m o

!8'ares

) Mean !8'are % !i(.

/

Re(ression .00 / .00 1. .333

Resi)'al /3.


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a. $epen)ent VarialeI The income has increase)

%rom the aove iAvariate re(ression analysis it is si(niicant at 3.33/ level. !o, n'll hypothesis

has een re@ecte) an) alternative hypothesis is accepte). &t means the operational assistancereceive) rom M%&s is help'l in improvin( income level.

M*0I(E E2ESSI-# A#A5SIS $E0;EE# DIFFEE#0 3AIA$ES

EA0ED 0- S0A#DADS -F I3I#2

1%): there is no si(niicant relationship et+een livin( stan)ar)s improve) an) increase in

income, increase in savin(s, etter access to health care, etter access to e)'cation, an) inancial

sit'ation improve).

1a): increase in income, increase in savin(s, etter access to e)'cation, etter access to health

care, an) improve) inancial sit'ation are si(niicantly relate) to improve) livin( stan)ar)s.

Descripti"e Statistics

N Ma7im'm MeanThe income has

/3 ; 0.;/2

The savin(s has

increase) /3 ; 0.0000

5etter access to

e)'cation /3 ; 0.33-0

5etter access to

healthcare /3 ; 0.33-0

%inancial sit'ation

im rove) /3 ; 0.1-00

Livin( stan)ar)sim rove) /3 ; 0.


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/

%inancial

sit'ation

improve),

5etter access

to healthcare,

The savin(s

has

increase),

5etter access

to e)'cation,

The income

has

increase)

. "nter

a. $epen)ent VarialeI Livin( stan)ar)s improve). #ll re8'este) variales entere).

Model Smmar7

Mo

)el

R R

!8'ar

e

#)@'ste)

R !8'are

!t).

"rror o

the

"stimate

Jhan(e !tatistics

R !8'are

Jhan(e

%

Jhan(

e

)/ ) !i(. %

Jhan(e

/ .-/2a .- .;1 ./2-0 .- 1;.


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/

9Jonstant? .0 .1< /.1; ./1-

The income has

increase).2< ./3; .- .1 .33

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Final Project Murthy5

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