Full Issue Jan Print

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Volume III Issue 1 January 2012

EDITORIAL BOARD

Dr. V. S. More, India

Dr. S. M. Ahire, India

Dr. Manoj Kumar, India

Dr. Abha Gupta, U.S.A.

Dr. Ravindra Rena Namibia

Dr. Rifki Ismal, UK.

Dr. Haitham Nobanee, UAE.

Dr. Pinaki Mazumder, USA.

Dr. Amit Kumar Dwivedi, India

Michael Sunday Agba, Nigeria

Dr. Y. T. Pawar, India.

Dr. Shakeel Ahmed, India

Dr. (Mrs.) Swalehak Pathan, India.

Dr. El-Nabulsi Ahmad Rami,S. Korea.

Dr Balakrishnan P, Malaysia

Dr. Hj. K. Jusoff, Malaysia

Dr. Mohd Zainal Abidin, Malaysia

Dr. Vicky Mody, USA.

Dr. Rusli Bin Hj Abdullah,Malaysia

Dr. Lynn C. Dailey,USA

Dr. Bhanu Shrestha, Korea

Dr. Ahmed Umar Khan,India

Hamou Reda Mohamed, Algeria

Dr. Ghous M Khan, USA

Edib Smolo, Malaysia

Prof. Ekta Arora, India.

Dr. (Sr.) Jaya Shanthi, India.

Prof. Nawab Ali Khan, India

Prof. Shiv K. Tripathi, Tanzania

Pravin P. Ingole, Germany

Dr. Ananda. S., Sultanate of Oman

Dr.Mohammad Waqar Ashraf, Saudi Arabia

Dr. Amitabh Deo Kodwani, India

Dr. Anand Agrawal, Malaysia.

Emil R. Kaburuan, Ph.D. ,Taiwan

Dr.Tanu Kashyap,,India

Dr. G.Ananthapadmanabhan, India

Dr.Setyabudi Indartono, Indonesia.

Dr.Mohammed Belal Uddin, Bangladesh

Dr. S. D. Sindhkhedkar, India

Editor-in-Chief :

Dr. V. S. More (India)

Associate Editors:

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Chee-Keong C.(Malaysia)

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-Journal of Arts, Science & Commerce ■ E-ISSN 2229-4686 ■ ISSN 2231-4172

International Refereed Research Journal ■ wwwwww..rreesseeaarrcchheerrsswwoorrlldd..ccoomm ■ Vol.– III, Issue –1, Jan 2012

INDEX

1

EDUCATION

An Empirical Investigation Of Lecturers’ Organizational Commitment In

Technical And Vocational Colleges In Iran Khosrow Nazari, Zaidatol Akmaliah Bte Lope Pihie, Ramli Bin Basri &

Khairuddin Bin Idris (MMaallaayyssiiaa)

01-10

2

ENGLISH LANGUAUGE

English Language Teaching And Learning Issues In Malaysia: Learners’

Perceptions Via Facebook Dialogue Journal Wendy Hiew (MMaallaayyssiiaa)

11-19

3

BANKING

Problems And Prospects Of Mobile Banking In Bangladesh

S.M. Sohel Ahmed, Shah Johir Rayhan, Md. Ariful Islam

& Samina Mahjabin (BBaannggllaaddeesshh)

20-31

4

FINANCE

A Comparative Study of Self Help Groups (Shg’s) Quality Assessment Tools

Sanjay Kanti Das,(IInnddiiaa)

32-40

5

ECONOMICS

Making Of The Asean Community: Economic Integration And Its Impact On

Workers In Southeast Asia

Fumitaka Furuoka, Beatrice Lim, Roslinah Mahmud

& Khairul Hanim Pazim (MMaallaayyssiiaa)

41-47

6

MARKETING

Management of Micro-Enterprises

(A study on Indira Kranthi Patham in Srikakulam District – Andhra Pradesh)

Dr.S.Tarakeswara Rao, Dr. G.Tulasi Rao (IInnddiiaa)

48-60

7

TOTAL QUALITY MANAGEMENT

The Impact Of Total Quality Management Components On Small And Medium

Enterprises’ Financial Performance In Jordan Dr. Yaser Mansour Almansour ((JJoorrddaann)

61-65

8

GEOGRAPHY

Tourism Potentials In Baglan Tashil

Dr. Subhash Nikam, Dr. Deepak Thakre (IInnddiiaa)

66-71

9

MARKETING

Global Stock Market Integration - A Study Of Select World Major Stock

Markets P. Srikanth, Dr. K. Aparna (IInnddiiaa)

72-80


International Refereed Research Journal ■ wwwwww..rreesseeaarrcchheerrsswwoorrlldd..ccoomm ■ Vol.– III, Issue –1,Jan. 2012 [1]

AN EMPIRICAL INVESTIGATION OF LECTURERS’

ORGANIZATIONAL COMMITMENT IN TECHNICAL AND

VOCATIONAL COLLEGES IN IRAN

Khosrow Nazari,

Foundation of Education, Faculty of

educational Studies, University Putra

Malaysia, Malaysia

Zaidatol Akmaliah Bte Lope Pihie,

Foundation of Education, Faculty of

educational Studies, University Putra

Malaysia, Malaysia.

Ramli Bin Basri,

Science and Technical Education, Faculty of

educational Studies University Putra

Malaysia, Malaysia.

Khairuddin Bin Idris,

Department of Professional Developments

and Continuing Education, University Putra Malaysia, Malaysia.

ABSTRACT

With the purpose of determining the levels of lecturers’ organizational commitment

(affective, normative and continuance) based on gender, employment type, marital status, and

academic rank, the current research has been performed in Technical and Vocational Colleges in

four provinces of Fars, Khuzestan, Boushehr, and Kohgilouyeh and Boyerahmad in Iran. A

survey-based descriptive research with the analysis of mean, standard deviation, frequency and

percent and four t-tests were utilized to measure organizational commitment of 295 lecturers. The

relevant literature shows little studies pertaining lecturers’ commitment of higher learning

institutions in Iran. Considering the importance of lecturers’ organizational commitment;

educational leaders, policy makers and academic administrators should take necessary measures

to make their core workforce highly committed. This study has contributions to fill the gap of

theoretical and empirical knowledge and improve understanding of organizational commitment

issue.

Keywords: Affective, Continuance, Normative, Overall Organizational Commitment, Technical

and Vocational Colleges, Iran



INTRODUCTION:

Organizational commitment has been the focus of attention both in management literature and research for the

past four decades. According to Allen and Meyer (1996, 1997), Armstrong (2001), Cohen (2007), employee

commitment is not limited to national boundaries or particular organizations, but is a universal issue and needs

further research. It plays a key role in attaching the employees to the organization in such a way that the more

organizational commitment is deeper, the longer employees continue to stay with the organization (Allen &

Meyer, 1996; Cohen, 2007; Martın, 2007; Meyer, Becker, & Vandenberghe, 2004). Knowing that management

strategies dependent on control are not suitable to manage educational institutions; administrators try to perform

strategies based on commitment to manage such organizations (Martın, 2007; Winter & Jackson, 2006).

In addition, one of the most important factors of success in higher education institutions is lecturers’

commitment (Aminbidokhti & Salehpoor, 2007; Bhatnagar, 2007; Davoodipoor, Ahancheyan, & Rezvani, 2008;

Hossaini, Amirtash, & Mozafari, 2005). Lecturing is one of the professions that need high commitment; the

workload is heavy, the role is broad and the lecturers are committed and responsible in educating the students.

Teachers strong in organizational commitment find it easy to be interested in whatever they are doing and can

involve themselves unconditionally. Without commitment, some may even leave the profession and in a case of

no longer feel committed to their job, they would probably shirk in their daily duties which absolutely cause

other horrible effects, especially to the students (Hossaini, et al., 2005; Khatibi, Asadi, & Hamidi, 2009;

Yaghobi, Yarmohammadyan, & Javadi, 2007). However, the literature shows little research on organizational

commitment in higher education institutions (Chughtai & Zafar, 2006; Hamidi & Keshtidar, 2004; Hossaini, et

al., 2005).

TECHNICAL AND VOCATIONAL COLLEGES:

Technical and Vocational Colleges (TVCs) as the context of this study have experienced remarkable changes

over the past ten years in Iran. The key role of TVCs in training and providing technicians has made their

position to be upgraded. Based on the last decision in relation to these colleges, they were transformed to be

supervised by the Ministry of Higher education. These organizational changes have had positive effects on

lecturers who teach, research and guide students in these colleges (Sadri & Zahedi, 2009; Zainabadi, Salehi, &

Parand, 2007). To be successful in managing educational institutions, administrators need to become aware of

lecturers’ needs and commitment and strengthen their relationship with lecturers toward the direction of goal

achievement. Thus, satisfying these duties needs lecturers who are committed to institutions for which they

work. Highly committed lecturers are expected to obtain expertise in new subjects that contribute to their work,

enhance their ability to deal with students’ special needs, and to improve their classroom performance (Dixon,

1994; Park, 2005; Thomas, 2008).

Consequently, lecturers as the pivot role of educational systems, have critical and significant roles in building

the future of students. Pertaining this, educational leaders as well as administrators should be aware of the

factors that have contributions in making lecturers committed to the educational institutions. To achieve this

purpose, the current study intends to fill the gap of scarcity of theoretical and empirical knowledge on the

perceptions of lecturers relevant to the organizational commitment in TVCs in Iran.

ORGANIZATIONAL COMMITMENT:

Various definitions of organizational commitment can be found in the management of literature. According to

Mowday, Porter & Steers (1992), “commitment is the relative strength of a individual’s identification with

involvement in a particular organization”. They state three characteristics of commitment:

• Employee’ belief in and acceptance of the organization goals and values;

• Willingness to exert dedicated efforts on behalf of organization;

• Strong desire to maintain organization membership.

Introducing a three component model to show different employee linkages to the organization; Allen and Meyer

(1990, 1996) defined organizational commitment as psychological relationship between employees and

organization. Each component has different behavioral outcomes. Affective commitment refers to an

employee’s psychological attachment to, identification with, and involvement in an organization by acceptance

of organization goals and values in order to remain with the organization. Employees who have a strong

affective commitment stay in the institution because they “want to”(Mosadeghrad, Ferlie, & Rosenberg, 2008). Continuance commitment shows the tendency to continue working for the organization. The ones who have a

strong continuance commitment stay because they “need to” (Shaikh, et al., 2005; Shirbagi, 2007). Normative

commitment refers to the employees’ obligation feeling to stay in the organization. Employees think that

organization has supported them in needy times, thus they are obliged to stay with the organization by virtue of



their belief that it is morally not right to leave the organization. The ones who have a strong normative

commitment stay because they feel they “ought to”(Salami, 2008; Talebpour & Emami, 2006). Thus,

organizational commitment is an inner psychological feeling and force which obliged employees to continue in

an organization.

Researchers have studied organizational commitment as a dependent variable for antecedents such as age, tenure, education, and as a predictive indicator in organizational behavior and organizational outcome such as

job satisfaction, work motivation, turnover, intention to leave, absenteeism, and performance (Allen & Meyer,

1996; Meyer, Allen, & Smith, 1993). Mowday et al., (1992) stated four categories of factors affecting

organizational commitment:

• Personal Characteristics,

• Work experience,

• Job characteristics and

• Structural characteristics.

Giffords (2009) stated that to promote, systematize, and facilitate organizations’ functioning in achieving their

goals, mission, and objectives, factors such as demographics should be noticed by the managers of the

organizations. Tseng (2010) also stated that demographic characteristics could affect organizational

commitment. The demographic variables may have effects on organizational commitment and therefore should

be controlled for (Chughtai & Zafar, 2006; Ng, Butts, Vandenberg, DeJoy, & Wilson, 2006). Dennis and Alan

(2004) reported that gender in educational settings was the most important predictor of organizational

commitment. Lim (2003) reported significant differences on affective and continuance variables between men

and women. Males showed a higher score on the affective and continuance variables than women. Khatibi et al.,

(2009) reported that there was no significant difference between male and female employees in organizational

commitment. They also found that there was no significant difference between single and married employees

based on organizational commitment. Conversely, Salami, (2008) asserted that there were significant

differences between male and female employees by organizational commitment. Sabagheyan, Tondnevis, Mozafari, and Zareei, (2006) reported that there were significant differences between affective, continuance,

normative and organizational commitment of full and part time lecturers in Iran.

Therefore, the theoretical and empirical inconsistent results pertaining to organizational commitment reveals

that personal variables such as age, gender, marital status, education level, employment type and academic rank

are among frequently variables investigated to show their association with organizational commitment. In this

study, the differences in affective, continuance, normative and overall organizational commitment based on

gender, marital status, employment type and academic rank were explored using t-test.

RESEARCH QUESTIONS:

This study was designed to address the following research questions.

RQ1: What is the perception level of lecturers’ affective, continuance, normative and overall organizational

commitment?

RQ2: Are there differences in lecturers’ perception towards affective, continuance, normative and overall

organizational commitment based on gender?

RQ3: Are there differences in lecturers’ perception towards affective, continuance, normative and overall organizational commitment based on type of employment?


organizational commitment based on marital status?


organizational commitment based on academic ranks?

METHODOLOGY:

This is a quantitative survey method and the data were collected using questionnaire. The research design

consisted of a self-report questionnaire to evaluate lecturers’ affective, continuance, normative and overall

organizational commitment in TVCs in Iran. The unit of analysis is the lecturers who responded to the

questionnaire.

SAMPLE:

The population for the study consisted of faculty lecturers of TVCs in four provinces including: Fars, Khuzestan,

Boushehr, and Kohgilouyeh and Boyerahmad in Iran. 310 questionnaires were distributed and a total of 295

were completed and returned, yielding a response rate of 95.16%. Data were collected using proportional



stratified sampling method and simple random sampling method. G-power statistical method was used to

determine the sample size.

INSTRUMENT:

“Organizational Commitment Questionnaire” (OCQ) developed by (Meyer and Allen, 1997) with 18

measurement items was employed. The OCQ is composed of three sections corresponding to different types of

organizational commitment: affective, continuance and normative. The three components were measured by

using 5-point Likert scale ranging from 1 (“Strongly disagree”) to 5 (“Strongly Agree”). The original

questionnaire in English was translated into Persian using the forward- then-back translation approach (Chen,

Holton, & Bates, 2005). Validity of OCQ was approved by five experienced and knowledgeable lecturers in Iran.

They judged face, content and construct of OCQ appropriate for performing in TVCs. The reliability analysis

was measured before doing analysis. The results of coefficient were more than .80 in three components,

showing appropriateness of OCQ. Table 1 shows the results in details. Demographic items including gender,

marital status, type of employment, and academic rank were added to measure basic demographics.

TABLE 1: CRONBACH’S ALPHA OF THE STUDY VARIABLES

Variables Number of Items Sample Alpha

Affective Commitment 6 .82

Continuance Commitment 6 .83

Normative Commitment 6 .80

Overall Organizational Commitment 18 .82

PROFILE OF RESPONDENTS:

Demographic characteristics of respondents comprised data on gender, marital status, academic rank and type

of employment. Table 2 indicates frequency distribution and percentage of respondents participated in the

study.

TABLE 2: DEMOGRAPHIC CHARACTERISTICS OF PARTICIPANTS

Demographic Category Frequency (n=295) Percent

Gender Male 208 70.5

Female 87 29.5

Marital Status Single 61 20.7

Married 234 79.3

Academic rank Lecturer 155 52.5

Teacher 140 47.5

Employment Type Full time 123 41.7

Part time 172 58.3

From two hundred ninety five lecturers in TVCs in Iran participated in this study, 208 (70.5 %) were male and

87 (29.5%) were female, showing that TVCs were male oriented. 234 (79.3%) of the lecturers were married and

61 (20.7%) were single, suggesting that the overwhelming majority of lecturers in TVCs were married.

Regarding teaching staff in TVCs, there were two types of teaching staff: lecturers and non-lecturers (teacher).

Lecturers were full time staff, whereas teachers were mostly part time. Out of 295 respondents, 155 (52.5%)

were lecturers and 140 (47.5%) were teachers. In this study both of these two teaching staff is called lecturers.

Data collected showed almost equal distribution for academic rank. Data indicated some 172(58.3%) were full

time and 123 (41, 7%) were part time.

RESULTS:

Descriptive analysis using mean, standard deviation, frequency and levels were employed to measure

perception level of respondents regarding variable under study. To show differences in affective, continuance,

normative and overall organizational commitment by gender, employment type, marital status and academic

rank, t-tests were employed pertaining research questions two to five.



TABLE 3: DESCRIPTIVE STATISTICS AND ORGANIZATIONAL COMMITMENT

Descriptive Statistics Mean Std.

Deviation Levels

Frequency (%)

High Moderate Low

Affective Commitment 3.86 .29 High 168

(56.9%)

127

(43.1%) --

Continuance Commitment 3.48 .45 Moderate 95

(32.2%)

194

(65.8%)

6

(2%)

Normative Commitment 3.49 .56 Moderate 79

(26.8%)

216

(73.2%) --

Overall Organizational Commitment 3.61 .46 Moderate 123

(43.75%)

172

(58.3%) --

Note: Low (1-2.33), Moderate (2.34- 3.66), High (3.67-5)

Research question 1: level of affective, continuance, normative and overall organizational commitment?

Findings presented in Table 3 illustrate that affective commitment was higher than continuance, normative and

overall organizational commitment with a mean rating of M=3.86 and standard deviation of .29. More than half

(56.9%) of lecturers rated they possess a high level of affective commitment, 43.1% rated moderate and none rated low. The moderate level of commitment was reported for continuance and normative commitment with (M

= 3.48, SD = .45) and (M = 3.49, SD = .56) respectively. About two thirds (65.8%) of lecturers rated they

possess moderate level of commitment, 32.2% rated high and 2% reported low level of commitment in

continuance commitment. Some 79 (26.8%), and 216 (73.2%) reported high and moderate in normative

commitment, whereas none rated low. For overall organizational commitment, data indicated mean rating of

M=3.61 with a standard deviation of .46. More than half (58.3%) of lecturers reported they possess moderate

level of commitment in overall organizational commitment, 43.75% rated high level and none rated low in

overall organizational commitment.

Research question 2: Are there differences in lecturers’ perception towards affective, continuance,

normative and overall organizational commitment based on gender? To determine whether there were differences in affective, continuance, normative and overall organizational

commitment of lecturers based on gender, t-test was utilized in TVCs in Iran.

TABLE 4: T-TEST FOR LEVELS OF AFFECTIVE, CONTINUANCE, NORMATIVE AND OVERALL

ORGANIZATIONAL COMMITMENT BASED ON GENDER

Variables Gender N Mean SD t-value P

Affective Commitment Male 208 3.87 0.45 -.074 0.941

Female 87 3.86 0.45

Continuance Commitment Male 208 3.48 0.55 -.383 0.699

Female 87 3.50 0.56

Normative Commitment Male 208 3.53 0.49 2.975 0.003*

Female 87 3.37 0.38

Overall Organizational

Commitment

Male 208 3.62 0.30 1.107 0.269

Female 87 3.58 0.28

P<.05 df=293 SD = Standard Deviation

The results of t-test showed that there were not significant differences between male and female lecturers in

affective commitment, t = -.074, p>0.05. Likewise, the analysis of t-test showed that there were not significant

differences between male and female respondents in continuance commitment, t = -.383, P>0.05, whereas the

results showed significant differences between male and female lecturers in normative commitment, t = 2.975,

P<0.05. For overall organizational commitment, t-test indicated no significant differences between male and

female respondents, t= 1.107, P>0.05. Thus, it can be concluded that normative commitment among male

lecturers is higher than female lecturers in TVCs in Iran.

Research question 3: Are there differences in lecturers’ perception towards affective, continuance, normative and overall organizational commitment based on type of employment? The results of t-test in Table 5 showed that there were significant differences between full time and part time

lecturers in affective commitment, t = 5.212, P<0.05. Likewise, the t-test showed that there was significant



difference between full time and part time lecturers in continuance commitment, t = 2.678, P<0.05. Regarding

the normative commitment, the t-test also showed significant differences between two groups of full and part

time lecturers in TVCs in Iran, t = 4.735, P<0.05. For the overall organizational commitment, the t-test

indicated that full time and part time lecturers were significantly different, t = 7.102, P<0.05.

TABLE 5: T-TEST FOR LEVEL OF AFFECTIVE, CONTINUANCE, NORMATIVE AND OVERALL

ORGANIZATIONAL COMMITMENT BASED ON EMPLOYMENT TYPE

Variables Employmen

t Type N

Mean

SD t- value

P

Affective Commitment Full Time 123 4.02 0.45 5.212 0.000*

Part Time 172 3.57 0.42

Continuance Commitment Full Time 123 3.59 0.58 2.678 0.008*

Part Time 172 3.41 0.52

Normative Commitment Full Time 123 3.64 0.51 4.735 0.000*

Part Time 172 3.38 0.39

Overall Organizational

Commitment

Full Time 123 3.75 0.30 7.102 0.000*

Part Time 172 3.51 0.24

P<0.05 df=293 SD = Standard Deviation

Data indicated that full time lecturers had higher mean scores in affective, continuance, normative and overall organizational commitment in TVCs in Iran. Full time lecturers showed higher mean scores in TVCs in Iran. It

can be concluded that full time lecturers were more committed than part time lecturers in TVCs in Iran.


normative and overall organizational commitment based on marital status?

TABLE 6: T-TEST FOR AFFECTIVE, CONTINUANCE, NORMATIVE AND ORGANIZATIONAL

COMMITMENT BY MARITAL STATUS (N=295)

Variables Marital Status N Mean SD t-value P

Affective Commitment Single 61 3.82 .46 -.846 .398

Married 234 3.87 .45

Continuance Commitment Single 61 3.46 .60 -.284 .776

Married 234 3.49 .55

Normative Commitment Single 61 3.52 .45 .580 .562

Married 234 3.48 .47

Overall Organizational Commitment Single 61 3.60 .26 -.309 .757

Married 234 3.61 .30


The results of t-tests indicated that there were no significant differences between married and single respondents

in affective, continuance, normative and overall organizational commitment, t = -.846, -.284, .580, and -.309,

P>0.05 respectively. Therefore, marital status was not a significant variable that might make lecturers

committed in any components of the organizational commitment.


normative and overall organizational commitment based on academic ranks?

TABLE 7: T-TEST FOR AFFECTIVE, CONTINUANCE, NORMATIVE AND OVERALL

ORGANIZATIONAL COMMITMENT BY ACADEMIC RANK (N=295)

Variables Academic Rank N Mean SD t-value P

Affective Commitment Lecturer 155 4.04 .42 7.753 .000*

Teacher 140 3.66 .41

Continuance Commitment Lecturer 155 3.63 .57 5.094 .000*

Teacher 140 3.32 .49

Normative Commitment Lecturer 155 3.62 .49 3.334 .000*

Teacher 140 3.34 .37



Overall Organizational Commitment Lecturer 155 3.76 .27 11.245 .000*

Teacher 140 3.44 .21


The results of t-test analysis showed that there were significant differences between lecturers and teachers (non-

lecturers) in affective commitment, t = 7.753, P<0.05. Similarly, the t-test analysis showed that there was

significant difference between lecturers and teachers (non-lecturers) in continuance commitment, t = 5.094,

P<0.05. Regarding the normative commitment, the t-test also showed significant difference between lecturers

and teachers in TVCs in Iran, t = 5.334, P<0.05. For the overall organizational commitment, the t-test indicated

that lecturers and teachers were significantly different, t = 11.245, P<0.05.

Data indicated that in affective, continuance, normative and overall organizational commitment, respondents in

the lecturer position showed higher mean scores in TVCs in Iran. Data analysis indicates lecturers and teachers

were significantly different in affective, continuance, normative and overall organizational commitment.

Lecturers were more committed than teachers in TVCs in Iran.

DISCUSSION:

The study of academic staff commitment is becoming more and more popular because of its link to attitudes and behaviors that contribute to organizational outcomes and as a result may play a key role in how academic

staffs work to achieve their organizational or program mission, goals and objectives. While research exists that

explores the theoretical and empirical inter relationships among different features of commitment (Fink, 1995;

Mathieu & Zajac, 1990) it has not focused on lecturers and the relationship between their work environment,

and personal demographics (Cristina, Salome, & Cristina, 2009).

After evaluating the findings of the Organizational Commitment Questionnaire (OCQ) for the study of

organizational commitment among lecturers in TVCs in Iran, the results have arisen as follows. Organizational

commitment in this study was obtained from self rating and as findings indicated lecturers rated moderate in

explaining their perception on overall organizational commitment (M=3.61 SD=.29). The results showed that

the mean rating in descending order of high to low for affective commitment was (M=3.86 SD=.45), normative

commitment (M=3.49 SD=.46) and continuous commitment was (M=3.48 SD=.56). The results regarding

lecturers’ perception with the statements related to affective, continuance, normative and overall organizational

commitment for their level of perception in relation to their colleges were analyzed. It has been revealed that

lecturers mostly agree with the statements about affective commitment and this is followed by statements about

normative and continuance commitment, respectively.

In the pertinent literature the mostly desired situation about organizational commitment subscales is that the

members of an organization should have high affective commitment first and then normative commitment and

lastly continuance commitment (Demiray & Curabay, 2008). In the present study, affective (desired oriented)

commitment comes first, normative (obligation oriented) commitment comes second and continuance (necessity

oriented) commitment comes last. This result also is in line with the literature. These results are in line with

Hossaini, Amirtash, and Mozafari’s (2005) study in physical education colleges in Iran. They reported that the

mean rating of affective, continuance and normative organizational commitment were 3.67, 3.07 and 3.51

among board of lecturers respectively. They also reported that the level of overall organizational commitment

was 3.42 which falls into moderate level and is consistent with the result of the current study.

The moderate mean average of lecturers on overall organizational commitment is due to the fact that lecturing is

one of the professions that require high commitment (Awang, Ahmad, & Zin, 2010), and lecturers are

committed to transform a person from someone who knows nothing to someone educated. Among affective,

continuance, and normative commitment, affective commitment had the highest mean score (3.86). This

indicates that lecturers in TVCs are happy to continue with colleges, consider institutions’ problems as their

own, have a strong sense of belonging to these institutions, emotionally attached to colleges, and the institutions

have a great deal of personal meaning for them. In addition, the high mean score of lecturers’ organizational

commitment can be related to new reforms which have taken place in TVCs due to their significant role in

providing human resources for different parts of the country. Based on a new decision all TVCs in Iran which

already were supervised, managed and supported by Ministry of Education, have been transferred to be

supervised under the Ministry of Higher Education. This decision has probably encouraged and motivated

lecturers to continue their work in TVCs because of official, economical, societal and money benefits.

Supported by the studies of Hammidi and Keshtidar (2004), Hezouri (2002), in Iran, and Karrasch (2003), Salami (2008), and according to the t-test mode relating to organizational commitment and gender factors; there

were no significant differences in affective, continuance and overall organizational commitment between male

and female lecturers. However, the findings of this study were inconsistent with the findings of Therrese and

Bakalis (2006) and Mathieu and Zajac (1990) who found significant differences between male and female in



affective, continuance and overall organizational commitment.

In terms of the outcomes of t-test in regard to employees’ marital status, the findings indicated that differences

between single and married lecturers were not significant in affective, continuance, normative and overall

organizational commitment. This result is consistent with Salami’s study (2008) who found that differences

between single and married lecturers were not significant in organizational commitment in Nigeria among public and private respondents, however, the findings of the current study was in line with Khatibi, Asadi and Hamidi’s

study (2009) and Mosadeghrad (2008) who found that marital status was related to commitment in Iran.

For academic rank, the outcomes of t-test revealed that there were significant differences between lecturers and

non-lecturers (teachers) in affective, continuance, normative and overall organizational commitment in TVCs.

This is maybe because of this reason that teachers (non-lecturers) are not permanent employees of TVCs, thus

they feel less committed to these institutions. The high mean scores in affective, continuance, normative and overall organizational commitment of lecturers may be related to the fact that they have to show high

commitment to the colleges to be able to continue and be accepted as board of lecturers in these institutions.

Based on a new decision all TVCs have been transferred to continue under the supervision of Ministry of

Higher Education. Because of this, all lecturers have motivated and tended to continue their work in these

institutions, though they already were not interested to continue in these institutions. These results are consistent

with the work of Nancy (2001) and Hossaini, et al., (2005) in Iran.

For employment type, data indicated that full time lecturers were more committed in affective, continuance,

normative, and overall organizational commitment than part time lecturers. This is perhaps because part time

lecturers are not stable employees, thus they are less committed to the TVCs in comparison with full time lecturers.

This finding is consistent with the work of Hossaini, et al (2005) who found that there was significant relationship

between type of employment and normative commitment, but not affective and continuance, and overall

organizational commitment among board of lecturers. In addition, Sabagheyan, Tondnevis, Mozafari, and Zareei,

(2006) reported that there was significant relationship between full time and part time lecturers in continuance and

normative commitment, but not affective commitment among lecturers in physical education colleges.

In conclusion, the attachment level of the employee towards their institution is an important indicator regarding

organizational development and their willingness to do their job. In this regard, research studies focusing on this

topic should scrutinize on the current situation, and implications of these studies should be used to improve the

attachment level of employee in organizations. Such implementations are good opportunities to expand

optimistic attitudes of the employee towards their organization. In addition, organization managers should value

their employees, develop working conditions, value employee opinions, consider employee complaints and

reward their successes to increase the employee attachment level. When the employee members see that they

are considered, their emotional, normative and stability attachment will increase consecutively. Employees with

higher level of organizational attachment will be more willing to work for the organization and to stay as a

member of the organization, which brings about higher levels of output in the organization (Gurses & Demiray,

2009).

IMPLICATIONS FOR PRACTICE AND FUTURE RESEARCH:

Results from the present study should be interpreted with recognition of the following limitation. Choosing the

sample of the present study from one geographical region is the main limitation of the study which limits the

variety of the sample and generalizability of the findings. Therefore, more studies with geographically diverse

samples are needed to support the findings of the present study and more develop an understanding of

organizational commitment. Regardless of this limitation, findings from the present study should be viewed as

an early effort to determine factors related with lecturers’ organizational commitment in TVCs in Iran.

Educational leaders should consider lecturers’ commitment as an essential part of the decision-making process.

Administrators should stay aware of the level of their employees’ commitment and alter their management

practices whenever applicable in an attempt to increase lecturers’ commitment. The body of literature examining the relationships between lecturers’ organizational commitment and personal demographics has yet

to be conclusively determined. Thus, this gap in the literature cause to be doubts about the effects that

demographics may have on employee commitment. For this reason, there is a strong need for reproduction

studies that scrutinize the demographic variables associated with lecturers’ organizational commitment.

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ENGLISH LANGUAGE TEACHING AND LEARNING ISSUES IN

MALAYSIA: LEARNERS’ PERCEPTIONS VIA FACEBOOK

DIALOGUE JOURNAL

Wendy Hiew,

Centre for the Promotion of Knowledge and

Language Learning, Universiti Malaysia Sabah, Malasiya

ABSTRACT

The purpose of this research was to gather English as a second language (ESL) learners

perceptions pertaining to their experience in learning English language in secondary schools,

colleges and local universities. The research methodology incorporated dialogue journal using

Facebook. Dialogue journal is a written communication between a teacher and students or other

writing partners, which provides a natural context for language development and a new channel

of communication outside the classroom. The research incorporated Facebook as it is currently one of the most prominent online social networking sites among Malaysians. 46 respondents from

public and private colleges and universities discussed various learning issues including

impediments that they encountered during English lessons in secondary school, college and

university; learners’ views and comments on the issues pertaining to local English language

teaching and learning; and suggestions to improve the teaching and learning of English. The

discussion revealed varying viewpoints such as difficulties and reasons that students faced in

learning the four language skills i.e. speaking, listening, reading and writing; and the lack of

confidence which hampered their language improvement. This research hopes to enlighten

educators of arduous challenges that students faced in learning the English language so that they

may strive to improve and consolidate their teaching skills, thus, making language teaching and

learning more effective and meaningful for both teachers and students.

Keywords: dialogue response journal, language proficiency, language skills.



INTRODUCTION:

The British colonial education system introduced the teaching of English in Malaysia in the1960s and it is still

entrenched in the current Malaysian educational system (Asmah Haji Omar, 1992). English is taught as a

second language in all Malaysian schools which is also a compulsory subject in both primary and secondary

schools. In the university level, local undergraduates are required to register a stipulated credit hour of English

courses based on the result of their Malaysian University English Test (MUET), which is an English proficiency

assessment course and a compulsory requirement for students who plan to pursue tertiary education at

Malaysian universities (Malaysian Examination Council, 2006).

Studies by Griggs and Dunn (1984), Smith and Renzulli (1984) and Wallace and Oxford (1992) have shown

that a match between teachers’ teaching style and learners’ preferred learning style will increase learners’

motivation and learning. However, serious mismatches between both styles will result in students becoming

bored, discouraged, becoming inattentive and performing rather poorly in tests and assessments (Felder &

Henriques, 1995; Godleski, 1984; Oxford, Ehrman & Lavine, 1991).

There are various definitions of the term ‘learning style’. According to Zou (2006) different researchers have

their own understanding of what constitutes learning styles. Oxford, Hollaway and Horton-Murillo (1992)

define learning styles as the general approaches (as opposed to specific strategies) that students resort to in

learning a new subject. Honigsfeld and Dunn (2006) define it as a biological and developmental set of personal

characteristics that make the same instruction effective for some learners and ineffective for others. Meanwhile,

Peacock (2001) defines it as students’ preferred mode of learning.

PROBLEM STATEMENT:

Students spend between 11-13 years (6 years in primary school and between 5 – 7 years in secondary school)

learning English, but a portion of students are still not able to master the language upon completing secondary

school. There are various factors that could have contributed to this failure –learners’ learning methods,

motivation, perceptions, teachers’ teaching methods and/or approach, syllabus and lesson plan, among others.

Therefore, it is imperative to understand learners’ views and experiences in learning a second language in order

to identify the difficulties and impediments that they encounter in the classrooms.

OBJECTIVES OF THE STUDY:

The objectives of this research are:

1. To gather learners’ experience and views pertaining to issues on English language learning problems in

secondary school, college or university;

2. To gather learners’ views on English language teaching and learning in secondary school, college and

university;

3. To gather learners’ suggestions on ways to enhance English language learning and teaching.

SIGNIFICANCE OF THE STUDY:

Teachers need to know and understand the impediments that learners experience in learning the four skills viz.

listening, speaking, reading and writing in order to prepare effective lessons and to guide learners in developing

their language proficiency. Therefore, it is pertinent that learners need to be given the opportunity to express

their views pertaining to their learning experience to ensure teaching and learning are effectively carried out in

the classrooms.

RESEARCH QUESTIONS:

The research questions in this study are as follow:

1. What are the language learning problems did ESL learners encounter in secondary school, college or

university namely speaking, listening, reading and writing?

2. What are ESL learners’ views on the issues of English language teaching and learning?

3. What are ESL learners’ suggestions to enhance the teaching and learning of English?

METHODOLOGY:

RESEARCH APPROACH:

A qualitative method was used to conduct the research by utilizing the content analysis of journal entries written

by 46 private and public college and university students.



SAMPLING:

A purposive sampling was used to select the 46 respondents who were former students of a public secondary

school in Kota Kinabalu, Sabah. The respondents were first to fifth semester students from various courses who

scored between Band 2 to Band 5 (Band 1 - limited user and Band 6 - highly proficient user) in their Malaysian

University English Test (MUET).

RESEARCH INSTRUMENTS:

DESCRIPTION OF THE FACEBOOK GROUP AND DIALOGUE JOURNAL:

By utilising Facebook, a closed-group was created to gather the 46 samples. Other Facebook users who were

not registered in the group were not able to read the respondents’ comments nor post their views.

The Note feature on the Facebook account was used as an alternative form of a journal. It was a mean to ensure

that all respondents contributed their opinions and suggestions pertaining to a question posted by the researcher.

The respondents must write in proper English i.e. complete and grammatically correct sentences and they were

not allowed to use abbreviations such as LOL (Laugh Out loud), BTW (By The Way), IMHO (In My Humble

Opinion), among others.

In the dialogue journals, the researcher posted three questions on the group’s wall message and the respondents

wrote their views and suggestions on their personal Note. The researcher responded and prompted questions

when there were ambiguous responses. Other respondents were also allowed to contribute their views and

suggestions on their group members’ journal entries. This eventually evolved into a dialogue.

DATA ANALYSIS:

The journal entries were analysed using content analysis and categorised according to the learners’ problems in

learning the four language skills viz. speaking, listening, reading and writing; learners’ classroom observations;

and learner’s suggestions to teachers and other learners on the teaching and learning of English. Frequency

count was used to score the responses.

FINDINGS AND DISCUSSION:

This section discusses the findings of the research namely i) the respondents’ views pertaining to the problems

they experienced in learning the four language skills; ii) respondents’ general views, comments and

observations on classroom teaching and learning experience; and iii) respondents’ suggestions for teachers to

enhance their teaching effectiveness and for other learners to improve their language skills based on the

respondents’ personal approaches.

LEARNERS’ LANGUAGE LEARNING IMPEDIMENTS:

This section provides the finding on the respondents’ views pertaining to language learning impediments that

they experienced in learning the four skills namely speaking, listening, reading and writing.

SPEAKING IMPEDIMENTS ENCOUNTERED BY LEARNERS:

TABLE 1: SPEAKING PROBLEMS AND REASONS AMONG ESL LEARNERS

Total Respondents Problems Reasons

18 respondents

• Hesitated to speak English with

their teachers and friends in and/or

outside the classroom.

• Worried about making grammatical mistakes.

• Felt embarrassed of their low language proficiency.

• Received negative physical response (smirk).

16 respondents • Felt self-conscious about their

speaking proficiency.

• Negative preliminary presumptions about

proficient speakers’ views towards them e.g.

not intelligent, incompetent, dull.

31 respondents

• Difficulty in speaking fluently.

• Mixing other languages with

English in their conversation.

• Unfamiliar with certain English vocabulary.

6 respondents

(Band 5 students) • No difficulty in speaking.

In Table 1, 18 respondents stated that they hesitated to speak English with their teachers and friends in or

outside the classroom because they worried about making grammatical mistakes and felt embarrassed of their



low language proficiency. This is due to the negative physical response, such as a smirk, that they received from

other more proficient speakers when learners spoke incorrectly.

Meanwhile, 16 respondents stated they felt self-conscious about their speaking proficiency because they have

negative preliminary presumptions about proficient speakers’ views towards them as being slow learners,

incompetent and dull, among others. As a result, they were not fully involved in classroom activities even though they were constantly encouraged to speak freely by their teachers without being judgemental.

Therefore, these negative experiences and fear of negative judgement from others hindered effective language

learning and development among the ESL learners. Learners need to be aware that making mistakes are parts

and parcel of language learning and teachers need to constantly reassure and encourage them to continue

learning. Krashen, in his interview by Young (1992), stated that one of the causes of speaking anxiety among

students is due to teachers who expect them, usually beginners, to perform beyond their acquired competence. This can cause detrimental effects on learners’ motivation and confidence.

The majority of Malaysian students are bilingual who speak Bahasa Malaysia, the national language, and

English, the second language. Both languages are compulsory subjects in the Malaysian education syllabus. The

uniqueness of the Malaysian multicultural society and mixed-marriages create multilingual individuals who

either speak Tamil, Mandarin, various Chinese dialects such as Hakka, Cantonese, Hokkian, or other native

languages such as Iban, Kadazan and Murut, among others, depending on their family and social backgrounds.

Due to these circumstances, 31 respondents experienced difficulty speaking fluently due to unfamiliarity with

some English vocabulary. This caused the respondents to incorporate other local languages and dialects with

English to ensure their meanings, intentions or thoughts are unambiguous. Unfortunately, the attempt hindered

the respondents’ speaking fluency. An example given by a respondent is as follow:

“I think you should try ‘menyakinkan’ (to convince) your parents to ‘beri kebenaran’ (give permission) for you

to join us on the trip”.

As a result, the respondents usually experience moderate anxiety and are reluctant to speak in English for fear

of being judged negatively. However, moderate feelings of anxiety in second language learning could help

students to build the desire to learn, to motivate or to get them to realise that they have to put more effort to

acquire the target language (Hadley, 1992).

LISTENING IMPEDIMENTS ENCOUNTERED BY LEARNERS:

TABLE 2: LISTENING PROBLEMS, REASONS AND EFFECTS AMONG ESL LEARNERS

Total

Respondents Problems Reasons Effects

15 respondents

• Unable to fully

understand their teachers

and lecturers.

• Teachers and lecturers

spoke too fast.

• Unsure of meaning of

words.

• Misunderstood their

teachers and lecturers’

intended meaning and

instructions.

• Replied or responded

inaccurately.

11 respondents

• Unable to keep up with

parts of a conversation or

discussion with their classmates and course

mates.

• Unfamiliar with the

topics of conversation

or discussion.

• Speakers spoke too fast.

• Asked speakers for

clarification.

9 respondents

• Unfamiliar with meanings

of certain words during

conversation.

• Unsure of responding

or replying to the

speakers.

• Reluctant to request

speakers to repeat or

explain the particular

word(s).

10 respondents

(Band 4 and 5)

• Almost no problem

listening.

Table 2 shows that 15 respondents were unable to understand their teachers and lecturers because they spoke

too fast during conversations, when giving instructions or explaining a topic. The second reason was due to

uncertainty of meanings of words. As a result, the learners misunderstood their teacher’s intended meaning of

the conversation and instruction, thus replying or responding incorrectly.



Meanwhile, 11 other respondents wrote that they were unable to keep up with certain parts of a conversation or

discussion in the classroom because they were either not familiar with the topic or the speakers spoke too fast. It

resulted in them asking the speakers for clarification or temporarily putting aside the ambiguous topic and

seeking clarification at a later period.

In addition, nine respondents related their experience about being unsure of meanings of certain words during a conversation which made them reluctant to respond or reply to the speakers. They feared the speakers would

view them negatively as being incompetent in the language. 10 of the respondents who were satisfactory and

proficient users (Band 4 and 5) had almost no problem in listening.

READING IMPEDIMENTS ENCOUNTERED BY LEARNERS:

TABLE 3: READING PROBLEMS, REASONS AND EFFECTS AMONG ESL LEARNERS

Total

Respondents Problems Reasons Effects

25 respondents • Unable to fully comprehend

passages and articles. • Encountered many

unfamiliar words.

• Hampered reading

comprehension and fluency.

21 respondents

• Required longer duration

to read passages and

articles.

• Encountered many

unfamiliar words.

• Constantly referred to

English and bilingual

dictionaries.

6 respondents

(Band 5

students)

• Occasionally

encountered unfamiliar

words

• Not mentioned • Referred to base forms,

prefix or suffix to guess

meanings of words.

Based on Table 3, 25 respondents claimed they experienced problem comprehending passages and articles

while 21 respondents required longer duration to complete the reading materials. The aforementioned 46

respondents gave the same reason to their impediment whereby they encountered many unfamiliar words which

hampered their reading comprehension and fluency. Besides, they had to constantly refer to English and

bilingual dictionaries to look up for the meanings of the unfamiliar words. In these situations, learners need to be taught and reminded to skim and scan reading passages especially when a limited time frame is given e.g.

during reading exercises or tests.

Meanwhile, six respondents who scored Band 5 said that they occasionally encountered unfamiliar words which

hampered their reading comprehension but were able to make sense of the passages by referring to the base

forms, prefix of suffix to guess the meanings of the words.

WRITING IMPEDIMENTS ENCOUNTERED BY LEARNERS:

TABLE 4: WRITING PROBLEMS AND REASONS AMONG ESL LEARNERS

Total Respondents Problems Reasons

32 respondents

• Required longer period to

write an essay.

• Not familiar with the topics.

Pre-writing stage:

• Difficulty procuring ideas to write essay

outlines.

Writing stage:

• Mentally construct sentences in mother-

tongue before translating into English

• Constantly referring to English and bilingual

dictionaries, and online translator.

Revising stage:

• To ensure sentences were grammatically

correct and comprehensible.

• To ensure ideas, sentences and paragraphs

were arranged coherently and cohesively.

11 respondents

• Difficulty in writing academic

essays.

• Need to synthesise, paraphrase and cite

various sources.

• Not exposed to academic writing in

secondary school.

Writing is one of the most difficult skills to master in learning a language. The findings in Table 4 showed that



32 respondents stated they required longer period to write an essay as they experienced difficulty procuring

ideas to plan their essay outlines in the pre-writing stage.

Another reason the respondents, specially low and average proficiency students, required longer time to write in

the writing stage was because they had to mentally construct sentences in their first language or mother-tongue

before translating into English. At the same time, the learners also spent a large amount of time looking up unfamiliar English words using bilingual dictionaries or online translator.

Finally in the revising stage, the respondents had to make sure that their sentences were grammatically correct

and comprehensible in addition to ensuring that their ideas, sentences and paragraphs were arranged coherently

and cohesively.

Meanwhile, 11 respondents who have taken academic reading and writing courses in college and university

commented about the difficulty of writing academic essays compared to creative essays. The latter essay requires learners to synthesise, paraphrase and cite various sources, which the respondents were not familiar

with because they were not exposed to academic writing in secondary school. Thus, it was difficult for them to

master the writing style within a short semester.

LEARNERS’ GENERAL VIEWS AND COMMENTS ON ENGLISH LANGUAGE TEACHING AND LEARNING:

This section provides the findings on the respondents’ views and comments pertaining to two issues on English

language teaching and learning namely their teachers and lecturers’ teaching approach in school, college and

university; and students’ negative perceptions towards learning English.

TEACHER’S TEACHING APPROACH:

TABLE 5: ESL LEARNERS’ VIEWS ON TEACHER’S TEACHING APPROACH

Total Respondents Views

28 respondents • Disagreed with teachers who were adamant about speaking only English in

the classroom.

21 respondents • Teachers and lecturers’ lessons were non-interactive.

Based on Table 5, 28 respondents said they disagreed with teachers who were adamant about speaking only

English in the classroom and also imposing similar practice upon the students. They opined that is was

necessary for teachers to explain certain procedures and meanings in the students’ mother-tongues so that they

can fully comprehend the teachers’ explanation. The respondents commended the teachers’ intentions to ensure

their students mastered the English language but they also needed to practice more flexibility and leniency in

accommodating to the students’ language limitations. By doing so, both teachers and students will be able to

provide and obtain effective and meaningful language learning experience, respectively.

Meanwhile, 21 respondents thought some of their teachers and lecturers’ lessons were non-interactive i.e. the

lessons were textbook-based, lacked pair or group discussions and presentations.

REASONS FOR STUDENTS NEGATIVE PERCEPTIONS TOWARDS LEARNING ENGLISH:

TABLE 6: ESL LEARNERS’ REASONS FOR STUDENTS’ NEGATIVE PERCEPTIONS TOWARDS LEARNING ENGLISH

Total Respondents Views

25 respondents • Passive learners viewed English as just another subject to pass, has no necessity

and practicality in their future.

21 respondents

• Passive learners have no intention to further their studies upon completing

secondary school.

• Passive learners intend to seek employment.

According to the respondents who were proactive in learning the English language as shown on Table 6, 25

respondents mentioned that their former secondary schoolmates who were passive learners viewed English as

just a subject to pass and did not see the necessity and practicality of it in their future careers. This was

supported by 21 respondents who said that low academic achievers did not intend to further their studies and

planned to seek employment, usually as odd job workers, upon completing secondary school. Some of the

reasons given were reasonable such as the students were not academically-inclined, they came from low-income

families whose parents could not afford to provide financial support for them to further their studies, and some

students had many siblings which required them to work and provide financial assistance to support their parents and families, among the reasons.



LEARNER’S SUGGESTIONS TO IMPROVE THE TEACHING AND LEARNING OF ENGLISH:

This section provides the findings of the respondents’ suggestions for teachers and lecturers to improve their

teaching approach in the classroom; and for students to improve their language skills based on the respondents’

experience and personal approaches.

TEACHER’S TEACHING APPROACH :

TABLE 7: ESL LEARNERS’ SUGGESTIONS TO IMPROVE TEACHER’S TEACHING APPROACH

Total Respondents Suggestions

5 respondents • Be more patient in guiding and teaching students.

28 respondents • Teachers and lecturers should be more creative in their lessons and not rely only

on textbooks.

39 respondents • Teachers and lecturers should use other mother –tongues to explain meanings of

unfamiliar words.

22 respondents • Teachers and lecturers should introduce new vocabulary during lessons.

In Table 7, five respondents suggested that teachers should be more patient in guiding and teaching especially

the lower and average proficiency students. This will ensure students are more motivated and responsive

towards the teachers and lessons. Meanwhile, 28 respondents preferred if teachers and lecturers incorporated

more creative teaching approaches in their lessons such as using interactive online programmes and videos

instead of the conventional ‘chalk-and-talk’, PowerPoint and textbook-based lessons.

39 respondents opined that educators should use their students’ mother-tongues, depending on the educators’

command of the language, to explain meanings of unfamiliar words. This is supported by Krashen’s Input

Hypothesis that teacher’s language instruction should be full of rich input (both in spoken and written language)

that is roughly tuned at the appropriate level for the learners in the class to provide meaningful language

learning experience (Krashen, 1981).

Finally, 22 respondents suggested that teachers should introduce new words during lessons as a mean to guide

students to comprehend and use the vocabulary correctly in proper contexts. In the Malaysian Curriculum

Specifications for primary and secondary schools, it contains a word list which consists of high frequency

words commonly used in the English language which learners will need even when reading simple texts and to

understand them in the context of what they read. These are also the words that learners will use when going about their writing task. Teachers are encouraged to add to the word list according to the proficiency of their

learners as well as when teaching a particular topic (Malaysian Curriculum Specification, 2003).

CLASSROOM ASSIGNMENTS AND ACTIVITIES :

TABLE 8: ESL LEARNERS’ SUGGESTIONS TO IMPROVE CLASSROOM ASSIGNMENTS AND ACTIVITIES


6 respondents

(Band 5 students)

• More extensive, interactive and comprehensive individual or group

assignments and presentations.

18 respondents • Teachers and lecturers should incorporate games in a fun and interactive

way.

Six respondents in Table 8 suggested that lecturers should plan more extensive, interactive and comprehensive

individual or group assignments and presentations which will be worthwhile and practical for them to be utilised in other courses. In addition to that, lecturers should ensure that the presentations are conducted in a

serious and formal environment, similar to a conference, in order to expose students to a simulated conference.

Besides, it is also to ensure students invest more effort in completing their assignments and delivering an

excellent presentation.

Secondly, 18 respondents viewed that games are effective methods to assist students in language learning as

students are able to learn the language in context through a fun and interactive way. The respondents who

described their favourite English lessons in secondary school, college and university have similarly noted the

use of games which made the lessons lively and memorable. On top of that, games gave opportunities to every

student to shine especially shy learners who eventually became more outspoken and confident.

STUDENT’S LEARNING APPROACH:



In the dialogue response journal, the respondents offered their advice and suggestions on ways to improve

language development and proficiency based on their personal experience which were effective in helping them

become better learners.

SPEAKING AND LISTENING SKILLS:

TABLE 9: ESL LEARNERS’ SUGGESTIONS TO IMPROVE SPEAKING AND LISTENING SKILLS


26 respondents

• Converse with friends who have good command of English or with English

native speakers via Skype, Yahoo Messenger.

• Watch English movies and documentaries.

• Practice speaking in front of a small audience before a presentation.

• Consistently practise speaking English with teachers, lecturers and friends.

Based on Table 9, one of the 26 respondents stated that watching English movies and documentaries

such as The National Geographic and Discovery helped him in his pronunciation, sentence structure construction, usage of words in contexts and vocabulary range development. Another respondent

suggested watching English movies without foreign subtitles as this will force learners to focus on the

spoken words.

To improve one’s speaking skill, three respondents suggested that learners should converse with

friends, who have good command of English, and English native speakers via Skype, Yahoo Messenger

or other forms of Internet voice services. The continuing rapid advancement of information technology

and multimedia has turned the world into a borderless continent especially with notable ubiquitous

social networking sites such as Facebook, MySpace and Tweeter. Six respondents suggested that local

English teachers should contact overseas native English teachers to form an educational network

which allows students from both countries and/or continents to socialise and help local learners to

improve their communication skills.

It is a norm to feel nervous before a presentation for both proficient and less proficient speakers. Ten

respondents said these worries can be reduced by practicing before a presentation in front of a small

audience whom the speaker is comfortable with. Preliminary feedbacks and comments from peers will

help speakers improve their presentation skills and boost their confidence. One respondent of this

research expressed his satisfaction participating in oratory presentations and competitions which

helped to build his confidence and develop his speaking skill.

“My experience participating in oratory presentation and competitions such as public speaking and

debates have helped elevate my confidence and honed my speaking skills. Even though I never won,

the experiences have been priceless. (sic)”

WRITING SKILL:

TABLE 10: ESL LEARNERS’ SUGGESTIONS TO IMPROVE WRITING SKILL

Total Respondents Suggestions Benefits

18 respondents

• Practice writing daily. Be more

patient in guiding and teaching

students.

• Train students to put thoughts in to words.

• Train students to use effective forms of

expressions and suitable choices of words.

• Learn new vocabulary and synonyms

through dictionary and Thesaurus.

In Table 10, 18 respondents agreed that practice writing daily helped to improve their writing skills

as it trained them to put their thoughts into words in addition to using effective forms of expressions

and suitable choices of words. Writing practice also helped the ESL learners learn new vocabulary

and synonyms via English and bilingual dictionaries, Thesaurus and reading newspapers, magazines

and books.

READING SKILL:



TABLE 11: ESL LEARNERS’ SUGGESTIONS TO IMPROVE READING SKILL

Total Respondents Suggestions Benefits

13 respondents

• Read English news reports

and articles, story books and

magazines.

• Newspaper covers general and

specific topics and issues.

• Provide materials for speaking

activities and writing assignments.

13 respondents suggested, and acceded by others, that reading newspaper reports and articles help to improve

their reading skill in addition to improving their speaking and writing skills, grammar proficiency, and

expanding their vocabulary range as shown on Table 11. Newspapers are one of the cheapest reading sources available that cover general and specific topics and issues such as education, environment, health, social issues,

science and technology which are suitable for students with average and below language proficiencies. The

materials are also imperative guides for students to improve their grammar skills by identifying tenses forms,

sentence structures and learning new words to expand their vocabulary and applying them in speaking and

writing. The respondents stated that they used these materials in their individual and/or speaking activities and

writing assignments.

CONCLUSION:

Learners’ perceptions towards the teaching and learning of English should be taken and reviewed seriously as it

is a two-way process involving teachers and learners. Meanwhile, teachers should take the initiative to ensure

their teaching plans are effective while students’ learning becomes meaningful through a myriad and mixture of

teaching methods to cater to a majority of the students’ learning styles and preferences. An empathic teacher can

motivate reluctant students to explore their maximum potential through consistent encouragement and self-

assurance. Besides, average and low proficiency students need to be proactive and consistently strive to

improve their English language proficiency until they are able to achieve their maximum ability. In the end, the

results will be an equal achievement and success for both educators and learners.

REFERENCES:

[1] Asmah Haji Omar. (1992), “The Linguistic Scenery in Malaysia”, Dewan Bahasa dan Pustaka. Kuala Lumpur.

[2] Felder, R. M, & Henriques, E. R. (1995), “Learning and Teaching Styles in Foreign and [3] Second Language education”. Foreign Language Annals, Vol. 28, No. 1, pp. 21-31.

[4] Godleski, E. S. (1984), “Learning Style Compatibility of Engineering Students and Faculty”, Proceedings, Frontiers in

Education Conference, pp. 362-364.

[5] Griggs, S. A., & Dunn, R. S. (1984), “Selected Case Studies of the Learning Style Preferences of Gifted Students”, Gifted

Child Quarterly, Vol. 28, Issue 3, pp. 115-119.

[6] Hadley, O. A. (1992), “Teaching Language in Context”, Heinle & Heinle. Boston.

[7] Honigsfeld, A., & Dunn, R. (2006), “Learning-Style Characteristics of Adult Learners”, The Delta Kappa Gamma Bulletin,

Vol. 72, Issue 2, pp. 14–31.

[8] Krashen, S. D. (1981), “Second Language Acquisition and Second Language Learning”, Pergamon. Oxford.

[9] Malaysian Examination Council. (2006), “Malaysian University English Test (MUET)”, Kuala Lumpur.

[10] Malaysian Curriuclum Specification. (2003), “Form 4 English Language Curriculum Specifications”, Malaysian Ministry of Education. Kuala Lumpur.

[11] Oxford, R., Ehrman, M., & Lavine, R. (1991), “Style Wars: Teacher-student Style Conflicts in the Language Classroom”.

In S. Magnan (Ed.), “Challenges in the 1990’s for College Foreign Language Programs”, Heinle & Heinle. Boston.

[12] Oxford, R. L., Hollaway, M. E., & Horton-Murillo, D. (1992), “Language Learning Styles:

[13] Research and Practical Considerations for Teaching in the Multicultural Tertiary ESL/EFL Classroom”, System, Vol. 20,

Issue 4, pp. 439-456.

[14] Peacock, M. (2001), “Match or Mismatch? Learning Styles and Teaching Styles in EFL”,

[15] International Journal of Applied Linguistics, Vol. 1, Issue 2, pp. 1-20.

[16] Smith, L. H., & Renzulli, J. S. (1984), “Learning Style Preferences: A Practical Approach for Classroom Teachers”, Theory

into Practice, Vol. 23, pp. 44-50.

[17] Wallace, B., & Oxford, R. L. (1992), “Disparity in Learning Styles and Teaching Styles in the ESL Classroom: Does This

Mean War?”, TESOL Journal, Vol. 1, pp. 45-68. [18] Young, D. J. (1992), “Language Anxiety from the Foreign Language Specialist’s Perceptions: Interviews with Krashen,

Omaggio, Hadley, Terrell, and Rardin”, Foreign Language Annals, Vol. 25, pp. 157-172.

[19] Zou, L. (2006), “Teaching in the Light of Learning Styles”, Sino-US English Teaching, Vol. 3, Issue 7, pp. 52-57.

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PROBLEMS AND PROSPECTS OF MOBILE BANKING IN

BANGLADESH

S.M. Sohel Ahmed,

Lecturer, Department of Marketing, Lalmatia Mohila College,

Lalmatia, Bangladesh.

Shah Johir Rayhan,

Department of Management & Finance, Sher-e-Bangla Agricultural University,

Bangladesh.

Md. Ariful Islam,

Regional Statistical Officer, Dinajpur, Bangladesh.

Samina Mahjabin,

Department of Management & Finance, Sher-e-Bangla Agricultural University,

Bangladesh.

ABSTRACT

The main objective of the study is to find out the problem and prospect of mobile banking in Bangladesh. For this research primary data were used. This study adopts with descriptive in nature. Total respondents were 120 within that 61 % respondents think it saves time than traditional banking, the highest number of respondents use mobile banking for ‘Air-time top-up’ service, that is 21%, out of 120 respondents 56% replied it is less costlier than traditional banking, 100% respondents did agree that it is speedy, and 38% respondents are upper class. Although this concept is new in Bangladesh but its potentiality is high. From this research, other researchers and policy makers will get an insight about the problems and prospects of mobile banking in Bangladesh.

Keywords: Problem, prospect, Mobile banking.



INTRODUCTION:

E-business has been continuously growing as a new industry during the last decade (Van Hoeck, 2001). The banking industry has been leading this trend in recent years, and now all banking transactions completing through internet applications is sometimes called e-banking (Boss et al., 2000; Smith, 2006; Hwang et al., 2007; Shin, 2008). E-banking has revolutionized the way business is transacted by globalizing the business enterprise. E-banking technologies have proliferated in recent years, and the availability of a wide range of products has led to increasing adoption among consumers. These technologies include direct deposit, computer banking, stored value cards, and debit cards (Servon and Kaestner, 2008). Consumers are attracted to these technologies because of convenience, increasing ease of use, and in some instances cost savings (Anguelov et al., 2004). E-banking has been viewed as an upgrading from previous electronic delivery systems to open new business opportunities for the banking industry (Ebling, 2001). www.wikipedia.com defines cellular phone as: The Cellular telephone (commonly "mobile phone" or "cell phone" or "hand phone") is a long-range, portable electronic device used for mobile communication. (www.enterpriseinnovation.net) For the past two decades, the banking sector has chosen a new service channel based on the progress of information technology – internet to respond to the changes in customer preferences and needs, increasing competition from non-banks, changes in demographic and social trends, and government deregulations of the financial service sector (Byers and Lederer, 2001). In the search for sustainable competitive advantages in the technological financial service industry, banks have acknowledged the value to differentiate themselves from other financial institutions through new service distribution channels (Daniel, 1999). In addition, customer’s transaction and communication abilities have been improved by the developments of information technology. Information technology enabled electronic channels to perform many banking functions that would traditionally be carried out over the counter (Giannakoudi, 1999). The rise of electronic payments media such as debit and credit cards has caused the value of paid in the USA to fall to – from about $49 billion in 1995 to about $42 billion in 2002 (Gerdes and Walton, 2002). The use of paper cheques has been supplemented step-by-step with e-cheques (i.e., electronic images) allowing banks to have more storage capacity, reduce costs, and improve Furthermore customer services (Rose and Hudgins, 2005). A more recent e-banking development is wireless internet applications of banking sometimes called m-banking (mobile banking) (Choi et al., 2006; Scornavacca and Hoehle, 2007). With the combination of two most recent technological advancements – internet and mobile phone, a new service (mobile data service) is thus enabled and the first such wireless internet commercial transaction is performed by the banking industry (Barnes and Corbitt, 2003). It is believed that m-banking will provide another new channel for banking services, especially for certain remote areas where online internet is still unavailable. Strategic implications and customer perception of m-banking services are explored (Laukkanen and Lauronen, 2005) with a focus on the consumer value creation and a better understanding about the customer-perceived value of m-banking services. For instance, mobile internet service has been quite popular in Japan (over 60 millions users in 2003) especially for those young and single (i.e., unmarried) consumers (Scornavacca and Barnes, 2004). Due to the widespread use of computer technologies in almost all aspects of life, organizations that are connected to the Internet started extending their services to their customers to include new applications and services that satisfy their customers’ desires to make better businesses. One of these emerging applications is mobile banking. The term mobile banking (or m-banking) describes the banking services that the user can perform via a mobile device ubiquitously at anytime and from anywhere. In order for users to access their accounts, they need a mobile device and network connectivity. Therefore, sitting in front of a computer is not a requirement anymore; accessing accounts can occur while users are waiting their turn at the dentist clinic or relaxing at the beach! (Al-Akhras and Qwasmi, 2011). Sylvie and Xiaoyan investigate the market status for online/mobile banking in China. With the recent and forecasted high growth of Chinese electronic banking, it has the potential to develop into a world-scale internet economy and requires examination. The results showed Chinese online and mobile bank users were predominantly males, not necessarily young and highly educated, in contrast with the electronic bank users in the West. The issue of security was found to be the most important factor that motivated Chinese consumer adoption of online banking. Main barriers to online banking were the perception of risks, computer and technological skills and Chinese traditional cash-carry banking culture. The barriers to mobile banking adoption were lack of awareness and understanding of the benefits provided by mobile banking (Laforet, 2005). Telecommunications companies world-wide are developing 3G mobile phones and applications. In the UK, mobile banking is considered to be one of the most value-added and important mobile services available.



However, the adoption rate of using 3G mobile phones for financial services is yet to be determined. The current research examined both innovative attributes and customers’ perceived risk in order to understand customers’ behavior and motivation toward this innovation. It has advanced the theoretical frameworks of innovation and customers’ risk perception as new attributes and risk dimensions were identified. The findings provide banking executives with a better understanding of what are the perceived advantages and disadvantages of 3G mobile banking services, helping them to plan marketing strategies and promotion approaches for 3G mobile banking services in the future ( Morna 2003). According to Jim Bruene (2006), ‘online banking is the best thing to happen to personal finance management since the invention of the paper statement. In many countries, half or more of online users routinely visit their bank to check account activities, verify deposits, and just see if everything is in order’. According to a report by Mintel International Group Ltd (June 1, 2006), the forces driving the growth of the Internet-increased broadband access, new innovations that provide a secure environment, and the coming-of-age of more tech-savvy people-will combine to propel online banking as well. Mintel expects that online banking will continue to grow and become more profitable for financial institutions, particularly as the Internet matures and subsequent generations become more technologically literate. Factors impacting online banking include the trend within the industry and the socioeconomic forces behind changing demographics (www.marketresearch.com). Mobile Banking is a financial transaction conducted by logging on to a bank's website using a cell phone, such as viewing account balances, making transfers between accounts, or paying bills. This can be conducted through the internet browser on the phone, through a program downloaded from your bank, or by text-message (SMS). (Malik Abdul,Saif Kamran and Usman Tahir:” EMERGING TRENDS IN IT”) Mobile banking is an application of mobile computing which provides customers with the support needed to be able to bank anywhere, anytime using a mobile handheld device and a mobile service such as text messaging (SMS). Mobile banking removes space and time limitations from banking activities such as checking account balances, or transferring money from one account to another. In recent research and studies it was found that while mobile banking and more specifically SMS-based mobile banking applications have become popular in some countries and regions, they were still not widely used.(Yu Shi:” Factors influencing the use of Mobile Banking: The case of SMS based Mobile Banking”) His study identifies and investigates the factors which influence customers’ decision to use a specific form of mobile banking, and specifically focuses on the evaluation of SMS-based mobile banking in the context of New Zealand. His research model includes the basic concepts of the Technology Acceptance Model (TAM), as well as some constructs derived through a focus group discussion. The model is tested to determine its predictive power with respect to individual’s behavior when considering the use of SMS-based mobile banking. The results of the data analysis contributes to the body of knowledge in the area by demonstrating that context specific factors such as service quality and service awareness are influencing user perceptions about the usefulness of SMS mobile banking which in turn affect intention to use and adoption. Secondly, his study demonstrates, on the example of SMS-based mobile banking; how a hybrid approach involving qualitative data collection and a subsequent quantitative survey can help investigate how user perceptions about usefulness and ease of use are formed. Although the study has its limitations, the implications of the results allow providing practical recommendations to the banking industry, and directions for further work. The telecommunications industry worldwide has scrambled to bring what is available to networked computers to mobile devices (Schofield & Kubin 2002). Presently, the use of electronic banking is considerably high and as more and more users sign up for electronic-banking, the maturity as regards remote banking ( i.e. banking outside the banking hall) is on the increase. With electronic banking, users can now conveniently carry out banking transactions, but this convenience cannot be achieved if the user does not have access to the internet, hence, in other words, the user cannot carry out a banking transaction while waiting for a bus, or perhaps while having lunch in a restaurant. With m-banking, convenience can be achieved 24hrs a day. This is because a user has access to his mobile phone all day, at all times. So, to effectively achieve a truly convenient banking mode, a truly mobile mode of banking has to be explored, hence the need for m-banking (Andrew, 2009) The convergence of the Internet and mobile networks creates new opportunities and applications. Treating mobile business as simply an extension to the traditional web could result in missing out unique differentiated qualities for new value-added possibilities. Mobile Banking is considered to be one of the most value-added and important mobile service available. Arcraf’s current research examined technological changes in mobile networks and innovative attributes of Mobile Internet. It has advanced the theoretical framework of innovation in service to develop a customer centric analysis of m banking value proposition. His article goes on to discuss critical factors in the diffusion of m Banking and explores reasons of failure and further prospects of success. (Ayadi, 2005).



According to Rasheda Sultana, across the developing countries, millions of people rely on informal economic activity and local level networks to earn their living. Most of these populations are from bottom of pyramid and they don’t have access to basic financial services/banks as access to them is costly and very limited. However, the outstanding growth of mobile sector worldwide has created a unique opportunity to provide social and financial services over the mobile network. With over 4 billion mobile cellular subscriptions worldwide, mobile network has the ability to immediately offer mobile banking to 61% of the world population.(Sultana, 2009) With the improvement of mobile technologies and devices, banking users are able to conduct banking services at anyplace and at anytime. Recently, many banks in the world have provided mobile access to financial information. The reason to understand what factors contribute to users’ intention to use mobile banking is important issue of research. The researcher’s purpose is to examine and validate determinants of users’ intention to mobile banking. He used a structural equation modeling (SEM) to test the causalities in the proposed model. The results indicated strong support for the validity of proposed model with 72.2% of the variance in behavioral intention to mobile banking. His study found that self-efficiency was the strongest antecedent of perceived ease-of-use, which directly and indirectly affected behavioral intention through perceived usefulness in mobile banking. Structural assurances are the strongest antecedent of trust, which could increase behavioral intention of mobile banking. This research verified the effect of perceived usefulness, trust and perceived ease-of-use on behavioral intention in mobile banking. The results have several implications for mobile banking managers. (Gu Ja, 2009). According to some researchers, the mobile payment services markets are currently under transition with a history of numerous tried and failed solutions, and a future of promising but yet uncertain possibilities with potential new technology innovations. At this point of the development, the researchers take a look at the current state of the mobile payment services market from a literature review perspective. They review prior literature on mobile payments, analyze the various factors that impact mobile payment services markets, and suggest directions for future research in this still emerging field. Consumer perspective of mobile payments as well as technical security and trust are best covered by contemporary research. The impacts of social and cultural factors on mobile payments, as well as comparisons between mobile and traditional payment services are entirely uninvestigated issues.( Dahlberg Tomi,Mallat Niina ,Ondrus Jan and Zmijewska Agnieszka: Past, present and future of mobile payments research: A literature review, Volume 7, Issue 2, Summer 2008, Pages 165-181). Although millions of dollars have been spent on building mobile banking systems, reports on mobile banking show that potential users may not be using the systems, despite their availability. Thus, research is needed to identify the factors determining users' acceptance of mobile banking. While there has been considerable research on the technology acceptance model (TAM) that predicts whether individuals will accept and voluntarily use information systems, limitations of the TAM include the omission of an important trust-based construct in the context of electronic/mobile commerce, and the assumption that there are no barriers preventing an individual from using an IS if he or she chooses to do so. Based on literature relating to the theory of planned behavior (TPB) and the TAM, this study extends the applicability of the TAM in a mobile banking context, by adding one trust-based construct (“perceived credibility”) and two resource-based constructs (“perceived self-efficacy” and “perceived financial cost”) to the model, while paying careful attention to the placing of these constructs in the TAM's existing nomological structure (Luarn, 2005). Mobile banking is growing at a remarkable speed around the world. In the process it is creating considerable uncertainty about the appropriate regulatory response to this newly emerging service. Researcher sets out a framework for considering the design of regulation of mobile banking. Since it lies at the interface between financial services and telecoms, mobile banking also raises competition policy and interoperability issues that are discussed in his paper. Finally, by unbundling payments services into its component parts, mobile banking provides important lessons for the design of financial regulation more generally in developed as well as developing economies.( Klein Michael,Mayer Colin: Mobile banking and financial inclusion : the regulatory lessons, 01 May 2011). The use of mobile phones in order to effectuate banking transactions is bound to increase in a significant way in the near future. This growth in mobile financial services not only depends on technological advances, but also on consumer confidence in the provided services. Mobile financial services can be divided into mobile banking and mobile payment; therefore, legal certainty must be established as to what supervisory regime applies to the various activities involving banks and non-banks. Mobile banking activities fall within the scope of the banking business, and oversight is provided by the competent financial market authority for prudential supervision, if the definition of banking activities encompasses all relevant mobile banking activities. Furthermore, legal aspects also play a role in the evolution of mobile banking as far as the need to enhance customer trust in the offered services is concerned. Major issues arise in relation to data security and consumer protection. Moreover, the



outsourcing of certain key activities to mobile operators deserves further attention, as mobile operators can, under specific circumstances, become deeply involved in mobile banking. (Weber, 2010). New electronic channels are replacing the more traditional ones. Mobile devices represent the recent development in electronic service distribution. An exploratory study was conducted on experienced electronic banking customers by using a qualitative in-depth interviewing method. The findings increase the understanding of customer-perceived value and value creation on the basis of attributes of mobile services and customer-perceived disadvantages of mobile phones in electronic banking context. The findings allow practitioners to improve their services and marketing strategies and pass on information to the academics about interesting future research areas (Laukkanen, 2005). In Bangladesh, the expansion of e-banking is beset with several infrastructural, institutional, and regulatory constraints such as inadequate availability of reliable and secure telecommunication infrastructure, absence of a backbone network connecting the whole country, poor ICT penetration in the banking sector, lack of skilled manpower and training facilities, absence of supportive policies, guidelines, rules and regulations relating to e-transactions and the like. Despite the constraints, efforts by the Bangladesh Bank in modernizing the country's payment system and commitment by the government in building ‘Digital Bangladesh’ have brought competition among the scheduled banks to improve banking services and rapidly adopt e-banking on a wider scale. This note provides a critical overview on development of e-banking in Bangladesh and future prospects for better understanding the issue that includes concept of e-banking, present status of scheduled banks in adopting e-banking services, and prospects of e-banking in Bangladesh on the basis of current trend in developing the ICT infrastructure in the country as well as ICT penetration in the banking sector that follows some policy suggestions for BB, Govt. of Bangladesh and scheduled banks so that optimum benefit through e-banking may be obtained.


• To identify prospect of mobile banking in Bangladesh;

• To detect problems of mobile banking in Bangladesh;

• To make suggestions on the basis of findings

METHODOLOGY:

Methodology is a system of broad principle or rule from which specific methods or procedures may be derived to interpret or solve different problems within the scope of a particular discipline .Methodology is not a formula but set of practices. The study was conducted to identify the problems and prospects of mobile banking in Bangladesh. Necessary data were collected from different ages of people and analyzed in terms of the objectives set for the study. This study was based on field level data. There are several methods of collecting this basic information. The data for this study were collected by the survey method. Survey is a research technique in which information is gathered from a sample of people by use of a questionnaire or interview. The word “survey” refers to a method of study in which an overall picture of a given universe is obtained by systematic collection of all available data on the subject. It is a method of data collection based on communication with a representative sample of individuals. The main reasons why the survey method is preferred to cost:

• Survey through sacrificing a certain details, enables quick investigation of a large number case.

• Survey entails much less cost

• Surveys provide quick, less expensive, efficient

LOCATION/GEOGRAPHIC COVERAGE:

The study has been conducted in different area of Dhaka city such as Sher-e-Bangla Nagar, Mirpur, Tejgaon, Dhanmondi, Tejkunipara, Mogbagar, Monipuripara, University, collage, and many houses. TYPES OF RESPONDENTS:

This research includes all types of people mostly selected different age, sex, and occupation people.

RESEARCH DESIGN:

Mobile banking is a new technology for all people in Bangladesh. In this country, most of the people use traditional banking system. People are afraid of using mobile banking because they cannot feel it trust worthy. In our country, most of the customers are influenced by advertisement. In recent period, customers become



more conscious about their savings. Marketers use these strategies for selling their products. Different banks advertise about mobile banking to give information about it to all the people in the country. This study has researched the consumer perception on mobile banking based on the above dimensions. The study involved a field survey conducted across different places in Dhaka, Bangladesh. The respondents were approached at home, university, collage etc. It was felt that the survey will give the correct result. The respondents were administered a structured questionnaire. The responses were recorded using a set of 15 statements. These statements were derived from the literature survey. They were finalized based on the discussion with some respondents. Responses were also sought regarding customers’ preference behavior. The research is exploratory in nature. Other relevant issues regarding the research are briefly presented below:

SOURCES OF DATA:

Both primary and secondary sources were used for the research purpose. Secondary data were used for providing the theoretical background to the research problem. The secondary data sources were-journal, books, internet etc. Primary data was collected through household survey by using appropriate research instrument. In the primary data collection procedure every individual respondent has been considered as potential respondent in the research.

QUESTIONNAIRE TYPE AND RESPONSES:

The questionnaire was starting with some introductory questions such as name, age, occupation, education, income and address. These questions provide the basic information about respondents. These types of questions make respondents comfortable to respond the study. There are 15 questions in this questionnaire. The respondents were asked the questions to know their knowledge and perception about mobile banking like “Have you ever heard about mobile banking?”, “Do you think you should use it?”, “Do you think mobile banking is trust worthy?” etc.

SAMPLING METHOD:

The basic sampling procedure for the study was convenience with cluster sampling. I have made the decision to carry out 120 respondents in different areas in Dhaka city.

RESEARCH INSTRUMENTS:

Information was collected through interviewer administered questionnaire method and through different secondary media. The questionnaire contains several questions for different respondents. PERIOD OF DATA COLLECTION:

Data were collected by the researcher himself through personal interviews with the respondents.

DATA COLLECTION AND ACCURACY OF DATA:

Generally most of the people are not interested to give time to answer a questionnaire. So it was very difficult to collect actual data because the information of the respondents was collected by approaching them to answer the question. To overcome this problem, all possible efforts were made by the researcher himself to ensure the collection of reasonably accurate information from the respondents. So, it has not been possible to apply any other method of investigation. Survey method has the advantage that it facilitates quick investigation and involves higher cost. In order to collect relevant information before taking interview, the whole academic purpose of the study was clearly explained and made clear to the respondents. The researcher himself collected the relevant data from the respondents through face to face interview. Data collected were checked and verified in the field for accuracy and consistency.

RESULT AND FINDINGS:

Basically the research was of descriptive in nature. Qualitative data are analyzed critically using judgment. Several statistical and analytical methods and tools were used for analyzing the gathered data from the survey. Column chart has been used as graphical tools to show the analysis of data. The package used in the study was: Microsoft Word, Microsoft Excel



HEARD ABOUT MOBILE BANKING:

Mobile banking is a new technology in Bangladesh which started from 31st March 2011. Dutch Bangla Bank Limited pioneered in mobile banking services in Bangladesh. Most people heard about it but not have a clear idea. According to my survey almost 94% people heard about mobile banking and 6% haven’t heard about mobile banking.

INTEREST TO USE:

Many people heard about mobile banking. But they yet have not felt that they should use it as they are happy to use traditional banking system. Some people feel interest to use it. About 55% people feel they should use it and 45% people haven’t feel to use mobile banking according to the survey.

TAKES TIME BY MOBILE BANKING THAN TRADITIONAL BANKING:

Mobile banking is real time on-line banking. As it is on-line banking it takes less time than traditional banking. It will make access to banking and advanced payment, transactions at affordable cost People have not to wait by standing in a long line which is happen in traditional banking system. But some people think it takes higher time and some people think it takes same time as traditional banking. According to the research only 5% people think it takes higher time, 34% people think it takes the same time and 61% people think it takes lower time than traditional banking system.

TIME SAVING:

Mobile banking is available anytime, anywhere throughout the country. So it can save one’s time. But all people not think the same. About 70% respondents think that mobile banking can save their time, where as 30% think it cannot save time.

COST:

It is convenient, affordable and it is much more effective in developing savings habits, it will make access to banking and advanced payment transactions at affordable cost. All people know that its cost is not higher than traditional banking. Around 56% respondents say its cost is lower, 20% say same and 24% say it is affordable than traditional banking. . A positive aspect of mobile phones is that mobile networks can reach remote areas at low cost.

TRUST WORTHY:

It is much safer and safeguard against fraudulent transactions. One can trust mobile banking as traditional banking system. It has secured pin code which is known by the user, and also has a check digit without it no one can deposit money. But in Bangladesh traditional branch-based banking remains the most widely adopted method of conducting banking transaction. The poor often have greater familiarity and trust with mobile phone companies than formal banking institutions. Furthermore a mobile handset can easily be adapted to handle banking transactions. But it is not commonly known by all. From the survey itis found that 63% respondents think mobile banking is trust worthy and 37% respondents feel it is not trust worthy.

USE:

It is much more effective in developing savings habits. Its using system is also easy. Anyone can use it. Poor people are often not considered viable customers by the formal financial sector as their transaction sizes are small, and many live in remote areas beyond the reach of banks branch networks. Informal banking services such as microfinance and village savings and loan associations remain limited in their reach. So, mobile banking system develops to bring poor people into banking system. 83% respondents face or heard no problem to use mobile banking. But 17% respondents heard or face problems to use it like-sometimes transaction do not reach at time, cannot operate it easily as traditional banking, not trust worthy.

PROSPECT OF MOBILE BANKING IN BANGLADESH:

Mobile Banking is a Banking process without bank branch which provides financial services to unbaked communities efficiently and at affordable cost. The aim of the service is to bring more people under the umbrella of banking service. Bangladesh Bank governor Dr Atiur Rahman inaugurated the service through



deposit and withdrawal of money from two banking outlets in the city. Government thinks it has a great prospect as it is a new technology in digital Bangladesh. But in Bangladesh many people think traditionally, because they cannot think it has any facility to use mobile banking. 69% people feel mobile banking has prospect in Bangladesh whereas 31% think it has no prospect in Bangladesh as many people will not feel interest or have belief on mobile banking.

SUGGESTION TO OTHER TO USE THE SYSTEM:

55% feel interest to use mobile banking but most people do not want to give suggestion to other to use it. As it is a new method of banking people haven’t 100% faith on it. So, people don’t want to take any risk by giving suggestion to use it. 68% respondents say they do not want to give suggestion and 32% respondents say they want to give suggestion to use mobile banking.

MAKE LIFE EASIER:

Mobile banking is real time on-line banking, available anytime, anywhere throughout the country, it is convenient, affordable and secure, it is much more effective in developing savings habits, it will make access to banking and advanced payment transactions at affordable cost, it is much safer, speedy and safeguard against fraudulent transactions. All of the characteristics of mobile banking make life easier. But 43% respondents feel it will not make life easier as it may not be trust worthy, but 57% respondents feel the facility which mobile banking give will make life easier.

SECURITY:

In mobile banking a confidential pin code is used by the user. PIN ensures security of money and protects fraudulent transactions. So mobile banking is fully secured. It also believed by 70% respondents, but about 30% respondents say it is not secured as they cannot fully trust on online banking than traditional banking system. SPEEDY PROCESS:

One benefit of mobile banking is a very speedy process. Transaction can be done anytime anywhere quickly in less time. So 100% people believe that it is a speedy process.

CLASS OF PEOPLE:

Mobile banking started with the idea to bring the poor under the umbrella of banking sector especially rural poor as there are not much bank facilities, also there savings is low so they feel shy to go to bank. But according to my survey 38% respondents feel upper class, 21% respondents feel middle class people can use mobile banking. But 41% respondents say mobile banking can be used by all class of people.

PROBLEMS ENCOUNTERED IN COLLECTING DATA:

The researcher had to face the following problems in collecting data from the respondents: i. Generally most of the respondents have not enough idea about mobile banking. So it was very difficult

to collect actual data. Because the information of the respondents was supplied from their idea. ii. Most of the respondents were not fully use mobile banking which caused another problem to data

collection to the researcher. iii. Sometimes respondent could not answer to questions accurately and to the point. iv. The respondents were usually remaining busy with their work. So, the researcher had to visit some of

them even at the work place and researcher sometimes had to pay more time to meet the respondents. v. Most of the respondents did not feel comfortable to answer questions. So researcher had to pay more

time to gain their confidence.

CONCLUSION:

Some policy Implications, Mohammad Mizanur Raman,(www.ampublisher.com) Mobile Phone Banking offers the potential to extend low cost virtual bank accounts to a large number of currently un-banked individuals worldwide. Change is being driven by falling costs of mobile phones including airtime, by competition and by the ability of electronic banking solutions to offer customers an enhanced range of services at a very low cost. Text-a-payment (TAP) builds upon the familiarity and comfort that people around the world have with sending text messages via their mobile phone. Instead of traveling to the bank to make their loan payment, clients can



now text their loan payment directly to the bank; saving them both travel time and money. This is also beneficial for the bank, since they can increase their outreach to rural areas while reducing their costs. (Catching the Technology Wave: Mobile Phone Banking and Text-a-Payment in the Philippines,John Owens, Anna Bantug Herrera,www.bwtp.org) M-Banking technology has become one of the most familiar banking features throughout the world. Nowadays millions of inhabitants of Bangladesh are within a network through mobile network coverage. But in the commercial sectors like banking, m-Commerce technology has not been adopted broadly yet. In context of Bangladesh where almost 95% of geographical areas including Chittagong Hill tract region is under cellular coverage and having sufficiency in Internet infrastructure in remote regions, m-Banking via mobile phones can be the right choice for the promising banking sector. Considering m-Commerce and m-Banking perspective in Bangladesh, a Push Pull services offering SMS (Short Messaging Service) based m-Banking system has been proposed which is able to provide several essential banking services only by sending SMS to bank server from any remote location. This proposed system is divided into five major phases: Interfacing Module, SMS Technology Adoption Module, SMS Banking Registration Module, Push Pull m-Banking Services Generation Module, and Modified Data Failover Module. This push-pull services specified system facilitates bank customers by carrying out real time m-Banking utilities by categorizing services into five major on the basis of their homogeneity. They are Broadcast, Scheduling, Event, and Enquiry and m-Commerce services. Fifteen push pull services underlying these categories are implemented in this proposed system which are most desired to customers. The proposed system not only brings banking transaction in hand’s grip but also makes it easier, robust and flexible with highest security. Moreover, modified data failover algorithm handles unexpected SMS server failure with any congestion or service request loss. At last, after evaluating each module of our proposed system a satisfactory accuracy rate 94.95% has been obtained. APPENDIX: 1

TABLE NO. 1

Characteristic Respondents Percentage

1. What do you think how much time mobile banking takes than traditional system?

a. Higher 6 5% b. Lower 73 61%

c. Same 41 34%

Total 120 100% Source: field Study.

5%

61%

34%

0%

10%

20%

30%

40%

50%

60%

70%

1 2 3

Series1

TABLE NO. 2

Characteristics Respondents Percentage

1. Do you use any mobile banking service?

a. Customer registration 21 12%

b. Cash in 0 0% c. Cash out 0 0%

d. Merchant payment 0 0%



e. Utility payment 37 20%

f. Salary disbursement 0 0%

g. Foreign remittance 13 7%

h. Air-time top-up 38 21%

i. Fund transfer 12 7%

j. None 60 33% Total 181

Source: field study.

12%

0% 0% 0%

20%

0%

7%

21%

7%

33%

0%

5%

10%

15%

20%

25%

30%

35%

1 2 3 4 5 6 7 8 9 10

Series1

TABLE NO. 3


What do you think about the cost of mobile banking than traditional banking?

a. Higher 0 0%

b. Lower 67 56%

c. Same 24 20%

d. Affordable 29 24%

Total 120 Source: field study.

0%

10%

20%

30%

40%

50%

60%

1 2 3 4

Series1

TABLE NO. 4


1. What do you think? It is-

a. Speedy process 120 100%

b. Slow process 0 0%




0%

20%

40%

60%

80%

100%

120%

1 2

Series1

TABLE NO. 5


1. Which class of people can use mobile banking?

a. Upper 46 38%

b. Middle 25 21%

c. Poor 0 0% d. All 49 41%


41%38%

21%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1 2 3 4

Series1

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A COMPARATIVE STUDY OF SELF HELP GROUPS (SHG’s)

QUALITY ASSESSMENT TOOLS

SANJAY KANTI DAS,

Assistant Professor & HoD,

Commerce.Lumding College, Lumding, Nagaon, Assam-782447

ABSTRACT

Micro finance through Self Help Group (SHG) has been recognized internationally as the

modern tool to combat poverty and for rural development. The SHG movement has come of age

after nearly two decades of experimentation. Its initial success has attracted considerable attention

of development practitioners, policy makers, fund providers, academicians, researchers and even corporate bodies. The SHGs today have become a vehicle to pursue diverse developmental

agendas and even for the profit motive. To avert such a situation, growth with quality has became

the paramount agenda of today among different stakeholders, as there is an over reaching concern

about sustainability of the SHG movement in India. In other words, the proliferation of SHG has

posed a serious challenge to sustain this movement by maintaining quality of SHGs and hence,

the quality assessment of SHGs is now being considered as a key concern. But the assessment

tools are devised by different agencies for different purposes and different sets of users. An effort

is made in this paper to make a comparative analysis of the two selected quality assessment tools

of SHGs. It is evidenced in this paper that the two separate assessment tools i.e. NABARD &

MYRADA shows the different languages about the quality or grades of selected SHGs. However,

it is concluded that some of the possible reasons for and possible implications of such grades

differences. However, the study suggested the need for developing common understanding on

SHG quality assessment.

Keywords: Micro Finance, Quality Parameter, Quality Assessment Tools, SHG-Bank Linkage

Programme, Self Help Groups.



INTRODUCTION:

Micro Finance is emerging as a powerful tool for poverty alleviation in the economy. In India, Micro finance

scene is dominated by SHG-Bank linkage programme as a cost effective mechanism for providing financial

services to the ‘unreached poor’. The Programme has been successful not only in meeting financial needs of the

rural poor women but also strengthen the collective self help capacities of the poor, leading to their

empowerment.

The SHG movement has come of age after nearly two decades of experimentation. Its initial success has

attracted considerable attention of development practitioners, policy makers, fund providers, academicians,

researchers and even corporate bodies. The SHGs today have become a vehicle to pursue diverse developmental

agendas and even for the profit motive. To avert such a situation, growth with quality has became the paramount

agenda of today among different stakeholders, as there is an overreaching concern about sustainability of the

SHG movement in India. In other words, the proliferation of SHG has posed a serious challenge to sustain this

movement by maintaining quality of SHGs and hence, the quality assessment of SHGs is now being considered

as a key concern. Though SHG movement is growing at a phenomenal pace and resulting in far reaching

benefits to its members and also rural bank branches, it is facing a number of serious challenges. All these

challenges could be summarized into two major challengesi. These are-

1. Uneven growth of SHGs in different parts and states of the country.

2. Uneven quality of SHGs across the country and issues related to their sustainability.

Rating of SHGs assumes importance as it not only a pre-appraisal tool but as well a self evaluation which is a

continuous process. Quality assessment of SHGs has come to be accepted as an important tool to ensure

standards in SHGs. In the enthusiasm to ensure monitoring of SHGs every stakeholder had their own innovation

in designing a new tool for grading of SHGs. This has resulted in flooding of market with rating tools with

slight variation here and there.ii

Only a few quality assessment studies were made in the country in general and Assam in particular. But the

assessment tools are devised by different agencies for different purposes and different sets of users. Several

rating systems for micro-finance interventions and Self-Help Groups (SHGs) have been developed in the past.

But most of these were restricted to understanding the creditworthiness of SHGs and employed indicators on

performance on basic group functions and credit absorption capabilities. Social, empowerment and behavioural

aspects of SHG functioning rarely found a place in the rating system. Further, these rating tools speak different

languages in assessing the quality of SHGs. Here, an effort is made in this paper to make a comparative study of

two selected SHG quality assessment tools.

REVIEW OF LITERATURE:

In this section, an effort is made to review a number of studies that has gone into the various quality,

sustainability and socio-economic issues related to SHGs in India - self-confidence, communication skills,

positive behavioral changes, savings, incomes and assets.

The study on SHGs conducted by EDA Rural System and APMAS (2006) iii on the SHG-Bank-linkage

programme in India, addressed a wide range of issues including cases of dropouts from SHGs and internal

politics, and issues of social harmony and social justice, community actions, book-keepings, equity, defaults and

recoveries and sustainability of SHGs.

A study by Meissner (2006)iv of the NABARD-GTZ Rural Finance Program examined the viability of SHG

lending in a regional rural bank branch, the Alwar Bharatpur Anchalik Gramin Bank (ABAGB), in Alwar

district of Rajasthan. Overall, the study found that the SHG lending operations of the branch were viable and

sustainable.

Another study conducted by Peoples Education and Development Organisation (PEDO 2006)v about their

SHGs programme and makes an attempt to evaluate social and economic impact on households of SHGs

members. They observed that members involved in SHGs programme have increased involvement in decision

making, awareness about various programmes and organisations. Moreover, the members get information about

the different sources of credit and also reported that there are the evidences of household income, food security

and increased standard of living.

A recent study by NCAER for GTZ and NABARD, pointed out that SHG - banking has resulted in a significant

decline in poverty among SHG members. It also resulted in a significant decline in SHG members’ dependency

on money lenders and other informal credit sources (NCAER, 2008vi). Even studies of Nirantar, which are

considered as most critical studies, pointed out that SHG - banking resulted in smoothening of basic

consumption of the poor and helped members to tie over economic emergencies without jeopardizing their



future (Nirantar, 2007avii

and 2007bviii

). Another NCAERix study in collaboration with the World Bank suggests

that SHG - banking resulted in increase in the proportion rural household, who got institutional credit.

A study on SHGs named “Lights and Shades” conducted by EDA Rural Systems and APMAS (2006x) ‘Self

Help Groups in India: A Study of the Lights and Shades’ observed that 30 per cent of SHGs in the sample were

involved in community actions. It was pointed out in the study that such community actions inculcated a new boldness and confidence amongst women, often putting pressure on the authorities to do their jobs, whether

through petitions or by staging rallies and blockades. The study also brought out that a significant proportion of

sampled groups (40 per cent) had a weak record of account keeping. It was pointed out that financial statements

were not being regularly prepared by the SHGs. Only 28 per cent of the SHGs (22 per cent in the South and 35

per cent in the North) prepared an income and expenditure statement and an equal number of SHGs prepared a

balance sheet and portfolio information. A study carried out by the Indian Institute of Bank Management (IIBMxi), Guwahati, Assam, and commissioned

by Sa-Dhan, shows that the SHG movement has not caught on in some north-eastern states for reasons that are

peculiar to the region. The main reason, it appears from the study, is that the micro-finance movement relies

mainly on Self Help Groups (SHGs) linked to banks. Banks are thinly spread in the region and are to be found

mainly in urban clusters in the valleys. Banks are not only few, they are understaffed. Most banks have two or

three employees and they are not equipped to handle many SHGs that could be spread over several kilometers.

The cost of promoting SHGs in the virtually high in hill regions, as Study Team points out.

In another study conducted by Haryana Community Forestry Project, 2007xii assessed the quality of SHGs in a

self style way which comprises nine broad indicators which includes organisational capacity, saving and credit,

financial management, micro-enterprises, skill development, awareness & attitudes, empowerment & influence,

networks & linkages and plans & visions.

Another recent study on Quality and Sustainability of SHGs in Assam, sponsored by NABARD, and Andhra

Pradesh Mahila Abhivruddhi Society (APMAS), September 2009xiii which is the first step in the NABARD-

APMAS collaboration for SHG quality improvement in three lagged states, viz. Assam, Bihar and Madhya

Pradesh. It is reported that the SHG program has resulted in social and economic benefits to a significant

percentage of the sample groups. Despite of all round support from the Government of Assam, NABARD,

NGOs, RRBs and active participation of primary members, the condition of SHGs in the state is far from satisfaction.

In another study conducted by Centre of Micro Finance, Jaipur, titled ‘Feasibility Study of a Special Purpose

Vehicle (SPV) for SHG financing through SHG Institutions’ developed sixteen variables to access the SHGs

quality viz. Feeling of homogeneity/ Solidarity, Velocity of internal lending, Governance issues, attendance in

meeting, member awareness about financial, transactions involvement in village issues etc.

Working towards a common acceptance and wide use of quality as well as organizational capacity assessment

processes for SMFIs, APMAS has developed a Quality Assessment (QA) systemxiv

– GRADES in collaboration

with Micro Credit Ratings International Limited (M-CRIL), New Delhi. GRADES represent the key assessment

areas of the Federation Assessment – Governance & Strategy, Resources, Asset Quality, Development & Impact,

Efficiency & Profitability, Systems & Operating Processes in addition to the SHG Performance. The weightage

and the broad parameters to be assessed in GRADES includes Governance & Strategy (15%), Resources (8%),

Asset Quality (8%), Development & Impact (7%), Efficiency & Profitability (9%), Systems & Operating

Processes (13%), and SHG Performance (40%).

The present study differs from earlier studies as it covers a comparative study of the quality assessment tools of

SHGs developed by NABARD and MYRADA and a modest effort is also taken to study the weakness of the two models and to put forward some suggestions in the context of quality assessment.

OBJECTIVES:

The objectives of this paper are-

1. To make a comparative study of quality of selected SHGs under NABARD & MYRADA assessment tools.

2. To study the issues relating to SHG quality assessment.

3. To outline conclusions based on the findings of the study to put forward some suggestions in the

context of quality assessment.

RESEARCH DESIGN AND METHODOLOGY:

The research design and methodology devised in this paper is being presented which has been designed keeping

in mind the focused objectives and with the aim of acquiring accurate and authentic data. The study was

restricted to only three Development Blocks out of eighteen Development Blocks of the Nagaon district of

Assam under both judgment and convenience sampling methods viz. Lumding Development Block, Udali



Development Block and Dhalpukuri Development Blocks. Some specific revenue villages were selected for the

purpose of the study wherein the concentration of SHG is very high. These revenue villages are featured with

high proliferation of SHGs. Data has been collected from both primary and secondary sources. Only SHGs

under SGSY which are enlisted with Directorate of SHGs under SGSY, Nagaon District for the year 2008-09 &

completed one years of existence are covered in the study and primary data are collected during the first half of 2011. Initially 75 SHGs from each block covering both male and women SHGs are randomly selected from

selected revenue villages out of which researchers could collect 50 useful filled questionnaires from each

Development Block, due to time, apathy of group members, defunct SHGs and distance constraints.

The two questionnaires are being prepared for assessing the quality of the SHGs of the study area. These questionnaires

are framed suitably according to the specified grading criteria viz. NABARD CRI Rating Tools and MYRADA Rating

Tools. A numerical score calculated on the basis of factors indicated by members. One questionnaire (No-1) contained fifteen (15) statements for studying quality/grading of selected SHG under NABARD CRI and the other questionnaire

(No-2) contained twenty one (21) statements for studying quality/grading of selected SHGs under MYRADA

Assessment Tools in the selected Development Block under Nagaon districts of Assam.

For assessing the quality of selected SHGs in the selected Development Block under NABARD Assessment

Tools fifteen variables are taken into consideration as par NABARD’s CRI. The NABARD’s CRI is basically

consists of two sets of variables viz. governance & systems related variables & financial variables. Governance

related parameters are frequency and regularity of meetings, attendance in the meetings, decision making

methods, lending norms etc. Financial parameters includes frequency & regularity of savings, use of savings,

regularity of loan repayments etc.CRI is the aggregate of the points scored on above described parameters.

According to the aggregate score, each group is assigned grades ‘A’, ‘B’ and ‘C’. Grade ‘A’ groups could be

given loans; grade ‘B’ groups need capacity building & grade ‘C’ imply intensive capacity building is required.

However, for suitability of the comparative study under NABARD’s CRI, the following scale is used keeping

conformity with the above cited grades.

TABLE 1.NABARD CRI RATING GRADE SCALE

Numerical Score Grade Analysis Grade

120 & above A Good

75-120 B Average

50-75 C Poor

Below 75 D Very Poor Source: Author.

Similarly, for assessing the quality of selected SHGs in the selected Development Block under MYRADA

assessment tools, twenty one variables are taken into consideration as per MYRADA Assessment Tools.

However, a numerical score calculated on the basis of variables indicated by the members. The degree of each

statement was determined using a four point rating scale.

TABLE 2. MYRADA RATING SCORE

Rating Scale Numerical Score

Good 3

Average 2

Poor 1

Very Poor 0 Source: Author.

Further, for suitability of the comparative study under MYRADA Rating Tool, the following scale is used

keeping conformity with the above cited rating scale.

TABLE 3. MYRADA RATING GRADE SCALE

Numerical Score Grade Analysis Grade

50 & above A Good

30-50 B Average

20-30 C Poor

Below 20 D Very Poor Source: Author.



COMPARATIVE STUDY OF SELECTED SHGs UNDER MYRADA AND NABARD ASSESSMENT TOOLS:

It is observed from the study of NABARD CRI and MYRADA Quality assessment tools, it is observed that

both the Quality Assessment Tools uses separate rating norms. However, after comparative analysis of the

selected assessment tools, the following common variables of Quality Assessment Parameters are found out.

TABLE 4. SOME COMMON QUALITY ASSESSMENT PARAMETERS IN MYRADA & NABARD

S.No. Common variables in Quality Assessment Parameters

1 Group Constitutions

• Size of SHGs

• Group composition

2 Organizational discipline

• Frequency & regularity of meetings

• Attendance at meetings

• Participation of members

• Regularity & amount of savings

3 Organizational Systems

• Level of awareness of rules

• Level of maintenance of records

• Transparency in operations

4 Financial Management & Performance

• Management of group funds

• Loan repayment by members

5 Capabilities & Achievements

• Literacy of SHG members Source: Author.

Under NABARD CRI assessment tools, the selected SHGs of Selected Development Blocks are assessed by

using the rating scale fixed by NABARD found that there is no sample SHG in Lumding Development Block

and Udali Development Block which are found ‘Good’ except five SHGs in Dhalpukuri Development Block,

only 28% of the selected SHGs of Lumding Development Block, 32% in Udali Development block and 26% in

Dhalpukuri Development Block are found ‘Average’ and 52% of the selected SHGs of Lumding Development

Block, 44% in Udali Development Block and 48% in Dhalpukuri Development Block are found ‘Poor’. Further,

20% of the selected SHGs of Lumding Development Block, 24% in Udali Development Blocks and 16%

Dhalpukuri Development Block are earmarked as ‘very poor’. This above categorization is made by using ‘rating marks’ fixed by NABARD and numerical score is fixed as was stated in the research methodology.

Further, by using MYRADA assessment tools, the selected SHGs of Selected Development Blocks are assessed

by using the rating scale fixed by MYRADA assessment tools found that there is no sample SHG in Lumding

Development Block and Udali Development Block which are found ‘Good’ except three SHGs in Dhalpukuri

Development Block, only 22% of the selected SHGs of Lumding Development Block, 26% in Udali

Development block and 22% in Dhalpukuri Development Block are found ‘Average’ and 18% of the selected

SHGs of Lumding Development Block, 28% in Udali Development Block and 34% in Dhalpukuri

Development Block are found ‘Poor’. Further, 60% of the selected SHGs of Lumding Development Block, 46%

in Udali Development Blocks and 18% Dhalpukuri Development Block are earmarked as ‘very poor’. This

above categorization is made by using ‘rating marks’ fixed by NABARD and numerical score is fixed as was

stated in the research methodology.

TABLE 5. QUALITY OF SHGS IN LUMDING DEVELOPMENT BLOCK

Lumding

Development Block

Udali Development Block Dhalpukuri

Development Block

GRADE NABARD MYRADA NABARD MYRADA NABARD MYRADA

Good- ‘A’ Nil Nil Nil Nil 05

(10%)

03

(06%)

Average-‘B’ 14

(28%)

11

(22%)

16

(32%)

13

(26%)

13

(26%)

11

(22%)



Poor –‘C’ 26

(52%)

9

(18%)

22

(44%)

14

(28%)

24

(48%)

17

(34%)

Very Poor-

‘D’

10

(20%)

30

(60%)

12

(24%)

23

(46%)

08

(16%)

09

(18%)

Total 50 50 50 50 50 50 Source: Field Study

FURTHER OBSERVATIONS:

1. It is observed from the comparative study that all of the SHGs under SGSY in selected Development

Block are found homogeneous in respect to gender. Again, most of them are composed of same

economic status but having varied social status. However, the size of the SHGs in Lumding

Development Block are too some extent similar in nature (10 to 12 members).

2. It is also observed from the study that most of the SHGs in selected Development Block are organized

with pre-determined objectives and visions either in written or in verbal form.

3. It is observed from the study that a good number of SHGs in selected Development Block are defunct

in nature and they are just in records only. This feature is found more in Lumding and Udali

Development Blocks in good number.

4. It is further observed from the study that though most of the SHGs in selected Development Block have

some guidelines regarding holding of fortnightly meeting of members but it is found that most of them

can not hold such fortnightly meetings of members. However, at an average one meeting in a month is

held but there is no regularity in holding such meetings. However, the SHGs in Dhalpukuri

Development Block wherein most of the SHGs holds regular meeting among their members.

5. Regarding attendance of members in the meetings, it is observed that in most of the SHGs in selected

Development Block where approximately 75% of the members attended the meetings regularly. This

feature is very common in SHGs in Dhalpukuri Development Block wherein cent percent attendance is recorded in majority of the SHGs.

6. Regarding participation of members in decision making process, it is observed that in most of the SHGs

in selected Development Block where a few members of the SHGs are actively engaged in decision

making process. These a few active members who influences decisions but majority of them aware

about the issues for organizing and managing the SHGs.

7. Though in most of the SHGs in selected Development Block are guided by well established rules and regulations for organizing and managing the same, but these are in many cases not known to majority of

members.

8. ‘One time saving in a month’ is the maxim in most of the SHGs in selected Development Blocks but

majority of the SHGs members does not follow the principle. In fact, most of the members are aware

that they have to save but no minimum amount for monthly savings is fixed. Regarding savings and its

frequency, minimum amount and mode of collection are often discussed in the member’s meetings. It is

further observed that most of savings collections are done on door to door system.

9. It is further observed from the study that in most of the SHGs in selected Development Block where

selection of borrowers is made in group meetings. It is further observed that utilization of SHG Funds

and recovery of member’s loans are reviewed in group meetings. But most of the members are

indifferent to loan purposes of borrowers. Finally, it is further observed that the recovery rate is not upto

the mark i.e. below 60%. The recovery rate in Dhalpukuri Development Block is found much higher

(95%) in comparison to other two development blocks.

10. Regarding maintenance of records and accounts, it is observed that in most of the SHGs in selected

Development Block are not properly maintained. After due observation of books and accounts, it is

found that in most of the SHGs in selected Development Blocks where accounts books like Cash Book,

loan register, minute books etc are maintained but these books are not found updated. SHGs in

Dhalpukuri Development Block wherein it is found that most of the SHGs are adopting regular

recording of accounts and found serious in maintaining books of accounts in a proper manner.

11. It is also observed that most of the SHGs in the selected Development Blocks promoted to economic

units. However, it is aptly observed that the rate of conversion to Grade I is very high while the said

conversion of grade I to Grade II is very low in all the selected Development Blocks. Further, it is

observed that only a few SHGs in Lumding Development Blocks and Udali Development Blocks

converted there units into economic units, but a large percentage of SHGs in Dhalpukuri Development

Blocks converted into viable economic units. Dairy farming, Piggery, weaving, goatary & poultry are

the major economic units that are promoted by SHGs in Dhalpukuri Development Blocks.



However,dairy farming appears to be the most lucrative project of the SHGs. Two milk production

associations namely Bhimmarali-Kapili Dogdha Utpadan Sanstha & Milik Basti Laxmi Dogdha

Utpadan Sanstha in the Dhalpukuri Development Block are the major dairy project in the block formed

by SHGs members.

NORMAL PRACTICES OF SHGS IN SELECTED DEVELOPMENT BLOCKS:

The variations in practices at SHG level have been spurring innovations in terms of products, systems and

methodologies and encouraging new standards in SHG promotion and practices; nevertheless it has brought lot

of incongruity in the established practices. However, from the present study in selected Development Blocks in

Nagaon districts, it is observed that each and every SHGs are performing some common practices which are

depicted in as below:

TABLE- 6. ANALYSIS OF SOME EXISTING PRACTICES.

S.

No.

Details of Quality

Assessment Parameters Normal Practices

1 Group Meetings SHGs take it as a rigor to meet frequently.

2 Subsidy dependence

SHGs deriving more subsidy and more and more

moving on towards subsidy regime.

3 New financial services

SHGs are comfortable only with credit and savings

and consider other services as not falling within the

mandate for which they etc., and need not directly

deal with such are established.

4 Affiliation to federation

SHGs remain, as stand-alone piece without any

affiliation to SHG-upstream like clusters/

federations and more often feel their role will be

limited in a federal set up.

5 Inter group lending

SHGs do not lend to other groups as a matter of

policy though more of idle funds are locked an up

within SHG, as the scope of lending within the

group is limited beyond certain extent.

6 Rotation of leadership

Rotation of leadership is seriously taken, with the

result clients with poor leadership qualities come to

manage the SHGs very often on turn basis.

7

Multiple membership within

the family

Sometimes, promoters find it easy to include

members from the same family for easy

management of groups.

8 Common economic activity

Common economic activity is preferred in some

cases like SGSY groups due to project compulsions.

9 Encouraging visitors

SHGs believe that visitors may borrow their own

concepts and keep certain things within as tricks of

trade and do not encourage visitors. Source: Self compiled.

ISSUES IMPACTING PERFORMANCE OF SHGS:

The detailed study findings on the performance of SHGs were presented in below wherein the areas of

relatively low performance by SHGs were identified.

The issues have been categorised under these heads and presented in detail in the subsequent paragraphs.

However, it needs to be borne in mind that most of these issues are not stand-alone in nature but have a

cascading impact on other issues. A macro-issue in project design could have a bearing on certain organisational

support issues, which in turn could result in some internal issues to the SHG.

• Quantity rather than quality: With more stress on the number of SHGs to be formed, the quality of

the SHGs formed certainly took a back seat. The NGOs, the MFIs and even the Govt machinery were

more involved in meeting the annual targets set. In many cases, many SHGs also came forward on their

own to be recognised as voluntary SHGs which are existed only in paper. While SHGs were formed,

coverage of the specific target population desired was an issue.



• Lack of standardisation / uniformity in practices: In the context of providing flexibility, there is lack

of standard guidelines on internal system and processes project aspects like auditing, elections and

rotation of office-bearers etc which hinders the performances of SHGs. Lack of proper and preodic

orientation on essential practices, lack of effective performance monitoring etc hinders sustainability of

the SHGs performances.

• Lack of planning for evolution of SHGs as income generating units: SHGs were motivated to take

up income-generating economic activities. However, the project had not conceptualised the capacity

building and other support systems like networking and marketing support that the SHGs would need.

• Lack of performance monitoring and evaluation: As against the envisaged role, the biggest gap was

in monitoring and evaluation. MFI’s or NGO’s solely relied on the monthly formats provided by

themselves. Even in this, many critical areas of SHG performance like conduct of elections, auditing,

income generating activities etc., were not captured They did not have the time / human resources to

directly assess the performance of SHGs, especially given their large numbers. Further, there was no

mechanism to identify the weaker SHGs. Hence, monitoring with a view to bringing about course correction / strengthening weak SHGs could not be followed. In some instances, even when awareness

of the poor performance of NGOs existed, it was not acted upon.

• Gaps in establishing linkages: Performance on credit linkage was not uniform across Development

Blocks. There were few Development Blocks where a substantial number of SHGs were not able to

take advantage of bank credit. The absence of regular monitoring of the NGO by the PIU and in turn the

SHGs by the NGO took away any sort of accountability for performance. The lack of accountability

brought in inefficiencies.

• Sustaining Group Cohesion: The formation, functioning and sustenance of the group depended to a

large extent on group cohesion and dynamics. Since functioning and decision-making were based on

consensus, unity of the group with a common ideology was important. Over a period of time,

maintaining this cohesion was an issue. Quite a few groups experienced conflict before / at the time of /

after venturing into income generating activities. Lack of agreement on the activity to be undertaken

was the start of the problem. Conflicts arose in business decisions and management leading to lack of

trust within the group. Lack of any sort of training on group dynamics, management also contributed to

this.

• Capability of members: Marginalised/ backward community members including tribals are the target

groups. Considering that very few women in these communities are literate, building the capacity of

such groups in itself is an issue. Since the training programmes are usually standard and not customised

as per the target audience, the improvement here has been marginal. As a result, power remains centred

around the marginally better off members in these groups.

• Inadequate capacity building: Given the low capacity of members, capacity building of members was

vital. This was also an important objective of the project and thereby a focus area. The training modules

envisaged included Group Training, Animator & Representative Training, EDP Training, Vocational

Training, Skill Training etc. However, there are few broad issues pertaining to this viz. Lack of

coverage of certain important aspects in the training, inadequate coverage of all stakeholders and

Backlog in the training envisaged. Various critical areas like managerial skills, communication skills,

inter-personal skills, financial management skills, project monitoring skills, lack of refresher training,

absence of training for new member etc., were important but were left uncovered.

CONCLUSIONS:

The quest for promoting SHGs cannot become merely a number driven agenda and the one and half decades of

experimentation on SHGs shall gradually evolve into setting new benchmarks on the quality and standards of

SHGs. Analysis of SHGs’ performance over years by many stakeholders have revealed dip in qualitative

attributes like repayments, group dynamics and robustness, business focus, interest of clients in participation in

decision making, attendance of group members in group meetings, zeal in taking leadership responsibilities and

increase in delinquency in savings, client drop outs, etc. However, SHGs need to over come the ‘Quality blues’,

the control of which rests with the stakeholders themselves, given the right orientation and attitude.

The quality of groups is quite low in the selected Development Blocks compare to other blocks or states. Strict

random selection of sample could be one of the reasons. Overall environment in the block/district and popular

perceptions about the status of SHG movement in the state appears to be aptly reflected by the grades of the

groups. In most other studies, the quality of groups does not follow any definite pattern. This is also evidenced

in this paper that the two separate assessment tools i.e. NABARD & MYRADA shows the different languages

about the quality of grades of selected SHGs. However, it is concluded that some of the possible reasons for and



possible implications of such grades are-

1. Most of the SHGs which are formed in the block are organized mainly to get financial benefits and

subsidies.

2. The attraction to avail short term gains is another major hurdle in the progress of the SHG movement in

the study area. 3. It is also reported that some groups break down immediately after getting either revolving funds or start

new group with new set of leaders to get another dose of fund and /or subsidy, which lacks constant

effort for quality enhancement of SHGs.

4. As it is observed that 20% to 30% sample SHGs are leveled as grade ‘Average’, hence constant support

from SHPI is necessary to make them improved. Moreover, some technical factors are also responsible

for poor gradation of SHGs in the study area i.e. interest collection first then principal, lack of economic homogeneity among members and loan accommodation mechanism etc.

5. Sincere effort on savings collection and poor repayment of borrowers often resulted low quality

performance of selected SHGs. Mandatory savings and high rate of recovery is quite necessary for

quality improvement of SHGs.

6. Finally, there is a need for conciseness about the well established and well recognized quality

assessment tools without biasness.

REFERENCES:

i APMAS & NABARD on ‘Quality and sustainability of SHGs in Assam’, Hyderabad ,Sept 2009,

www.shgateway.in [accessed on 12-05-2010] ii Devaprakash, R (2005), “Balancing Quality & Quantity in SHGs in India”,IBA Bulletin, August 2005,pp-25-39.

iii EDA Rural Systems and APMAS( 2006)‘Self Help Groups in India: A Study of the Lights and Shades’,

www.apmas.org [accessed on 02-09-2010] iv

NABARD – GTZ Rural Finance Programme, towards a refined and improved Management Information

System for linkage banking, Results of the study on MIS at SHG level. www.shgateway.in [accessed on 29-

05-2010] v Jai Pal Singh, 2006. PEDO’s SHG Programme Impact Assessment, A Draft Report, Centre for Microfinance,

Jaipur. available at http://www.solutionexchange-un.net.in/mf. [accessed on 29-05-2010] vi NCAER, 2008: Impact and sustainability of SHG - banking program: Submitted to NABARD and GTZ,

National Council of Applied Economic Research, New Delhi vii

Nirantar, 2007a: Examining self help groups: Empowerment, poverty alleviation and education - A

Qualitative study, Nirantar, A centre for gender and education, New Delhi. viii

Nirantar, 2007b: Examining power and literacy within self help groups - A quantitative study, Nirantar, A

centre for gender and education, New Delhi ix Basu,Priya and Pradeep Srivastava 2005.Micro finance and Rural Credit Access for the poor in India.

Economic and Political Weekly. 40(17) pp1747 – 1756. x EDA Rural Systems and APMAS( 2006)‘Self Help Groups in India: A Study of the Lights and Shades’

www.microfinancegateway.org, [accessed on 12-05-2010] xi Sharma, A, 2007: Expanding outreach to underserved regions: Kick-starting microfinance in north-eastern

region, IIBM, Guwahati, www.shgateway.in [accessed on 29-05-2010] xii Haryana Community Forestry Project, 2007, Forest Department, Govt. of Haryana, Self-Help Group

Capability Assessment 2007, http://www.microfinancegateway.org [accessed on 29-05-2010] xiii

APMAS ,Quality and Sustainability of SHGs in Assam, Sponsored by NABARD and APMAS, Hyderabad,

September 2009, www.apmas.org [accessed on 29-05-2010] xiv

Status of SHG Federations in Andhra Pradesh – APMAS Assessment Findings,

http://www.microfinancegateway.org/gm/document-1.9.24187/07.pdf

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MAKING OF THE ASEAN COMMUNITY: ECONOMIC

INTEGRATION AND ITS IMPACT ON WORKERS

IN SOUTHEAST ASIA

Fumitaka Furuoka,

Human Resource Economics Program School of Business and Economics,

Universiti Malaysia Sabah Sabah, Malaysia

Beatrice Lim,



Roslinah Mahmud,



Khairul Hanim Pazim,



ABSTRACT

This paper examined the ASEAN integration and its impacts on the workers in the region. It used the theories of economic integration to explain how the economic integration would effect the employment situations and working conditions of the workers in the ASEAN countries. It is interesting to note that it took more than 40 years to create the Free Trade Area (FTA) in the region after the establishment of ASEAN in 1967. Moreover, it is very well-known fact that the AFTA still have not adopted the Common External Tariff (CET). The free movement of goods and services under the FTA tends to have least direct effects on the workers in the FTA member countries. Furthermore, in 2003, ASEAN leaders agree to establish the ASEAN Community by 2020. However, ASEAN leader carefully excluded the free movement of labour under this “incomplete” Common Market named ASEAN Community. In short, these facts seem to indicate that ASEAN integration would have some indirect impacts on the employment situations and working conditions through foreign direct investment or international trade. However, ASEAN integration, so far, would have minimum direct impact on workers in ASEAN countries because the free movement of workers was carefully excluded from discussion and negotiation of making ASEAN Community.

Keywords: Economic integration, workers, ASEAN Community



INTRODUCTION:

It is well-known fact that the ASEAN (Association of Southeast Asian Nations) is one of the most successful and most ambitious economic integration in the world. The association was established on August 8, 1967 at the capital of Thailand with signing of the ASEAN Declaration, or so-called the “Bangkok Declaration” (ASEAN, 2011a).1 The ASEAN consists of the following ten member countries, 1)Brunei, 2)Cambodia, 3)Indonesia, 4)Laos, 5)Malaysia, 6)Myanmar, 7)the Philippines, 8)Singapore, 9)Thailand and 10)Vietnam. The original member countries of the ASEAN are Indonesia, Malaysia, the Philippines, Singapore and Thailand. Brunei became member state in 1984 while Vietnam joined ASEAN in 1995. Two more countries, Laos and Myanmar became the ASEAN member countries in 1997. Finally, Cambodia joined the ASEAN in 1999 (ASEAN, 2011a).2 According to the Bangkok Declaration, there are seven main aims and purpose of the ASEAN. First of all, ASEAN aims to promote economic, social and cultural development in the region. Secondly, ASEAN aims to promote regional peace and stability. Thirdly, ASEAN aims to promote active regional collaboration. Fourthly, ASEAN aims to provide assistance to each other. Fifthly, ASEAN aims to collaborate more effectively for the utilization of resource and expansion of international trade, Sixthly, ASEAN aim to promote the Southeast Asian Studies. Finally, ASEAN aims to maintain closer relationship with other international organizations (ASEAN, 2011a). On February 24, 1976, the leaders of original five ASEAN countries, namely, 1)Lee Kuan Yew, 2)Ferdinand Marcos, 3)Hussein Onn, 4)Kukrit Pramoj, 5)Suharto signed an important document called the “Treaty of Amity and Cooperation in Southeast Asia” (TAC) at Denpasar, Bali. This treaty became a underlying foundation of unique characteristics of ASEAN, or so-called the “ASEAN Way” (ASEAN, 2011b). According to the treaty, there are six fundamental principle of ASEAN. The first principle is the “mutual respect”. The second principle is the “freedom from external interference”. The third principle is the “non-interference in international affairs of other member countries”. The fourth principle is the “peaceful settlement of dispute”. The fifth principle is the “renunciation of use of arms”. Finally, the sixth principle is the “effective collaboration” (ASEAN, 2011b). It is very interesting to note that there is huge discrepancy among ASEAN member countries in terms of their population, total area and income. First of all, in term of population, the largest country in ASEAN is Indonesia with population of 231 million. The second largest country is the Philippine with population of 92 million, followed by Vietnam with population of 87 million. By contrast, the smallest country in ASEAN, in term of population, is Brunei with population of only 0.4 million. The second smallest country in ASEAN, in term of population, is Singapore with population of 4.9 million, followed by the Laos with population of 5.9 million. Secondly, in term of total area, the largest country in ASEAN is Indonesia with total area of 1.860 million square kilometres. The second largest country is Myanmar with total area of 0.676 million square kilometres, followed by Thailand with total area of 0.513 million square kilometres. On the other hand, the smallest country in ASEAN, in term of total area, is Singapore with total area of only 0.7 thousand square kilometres. The second smallest country in ASEAN, in term of total area, is Brunei with total area of 4 thousand square kilometres. Thirdly, in term of total national income, Indonesia has the largest Gross Domestic Product (GDP) in ASEAN and it amounted to US$ 546 billion in 2009. Thailand has second largest GDP and it amounted to US$ 264 billion, followed by Malaysia and its GDP amounted to US$193 in the same year. By contrast, Laos has the smallest GDP in ASEAN and it amounted to only US$ 5.5 billion in 2009. Cambodia has the second smallest GDP and it amounted to US$ 10.3 billion, followed by Brunei and its GDP amounted to US$ 10.7 in the same year. Finally, in term of income per person, Singapore is the wealthiest country in ASEAN and its per capita GDP amounted to US$36,631 in 2009. The second wealthiest country is Brunei and its per capita income amounted to US$26,486, followed by Malaysia and its per capita income amounted to US$6,822 in same year. On the other hand, Myanmar is the least wealthy country in ASEAN and its per capita GDP amounted to only

1 Other successful economic integrations in the world are the European Union (EU) and the North American Free Trade Agreement (NAFTA). The origin of the EU was a international organization called the “European Coal and Steel Community” (ECSC) which was established on July 23, 1952 with signing the Treaty of Paris. On the other hand, the NAFTA came into force on January 1, 1994. 2 Currently, EU consists of 27 member states while the NAFTA consists of 3 countries only. The original member states of EU are: France, (West) Germany, Belgium, Luxembourg, the Netherlands and Italy. The member countries of NAFTA are: Canada, Mexico and United States and it does not expand its membership to other countries.



US$419 in 2009. The second least wealthy country is Cambodia and its per capita income amounted to US$692, followed by Laos and its per capita income amounted to US$910 in same year.

TABLE 1: BASIC FACT OF ASEAN (2009)

Country Population (million)

Area (thousand km2)

GDP (US$ billion)

GDP per Capita (US$)

Brunei 0.4 5 10.7 26,486

Cambodia 14 181 10.3 692

Indonesia 231 1860 546 2,363

Laos 5.9 236 5.5 910 Malaysia 28 330 193 6,822 Myanmar 59 676 24 419

Philippines 92 300 161 1,749 Singapore 4.9 0.7 182 36,631

Thailand 66 513 264 3,950

Vietnam 87 331 96 1,119 Total 591 4,435 1,496 2,532

Source: “Selected basic ASEAN indicators” from ASEAN (2011c)

There is also huge difference in the labour market condition in ASEAN countries. In term of labour force, Indonesia has the largest labour force in ASEAN. Indonesia’s total number of labour force amounted to 116 million and 108 million workers are employed in 2010. Vietnam has the second largest labour force in the region. The total number of labour force in the country amounted to 50 million and 49 million workers are employed. The Philippines has the third largest labour force in the region. Total number of labour force in the country amounted to 38.8 million and 36 million workers are employed. By contrast, Brunei has the smallest labour force among ASEAN countries. Brunei’s total number of labour force amounted to only 198 thousand and 193 thousand workers are employed in 2010. Laos has the second smallest labour force. The total labour force in the country amounted to 2,776 thousand and 2,738 thousand workers are employed. Singapore has the third smallest labour force. Singapore’s total number of labour force amounted to 3,135 thousand and 3,045 thousand workers are employed. In term of unemployment rate, the Philippines’ unemployment rate is highest in ASEAN and its unemployment rate is 7.4 percent in 2010. Indonesia has second highest unemployment rate and its unemployment rate was 7.1 percent, followed by Myanmar and its unemployment rate was 4.0 percent in 2007. On the other hand, Thailand’s unemployment rate is lowest in ASEAN and its unemployment rate is 1.0 percent in 2011. Laos has second lowest unemployment rate and its unemployment rate was 1.3 percent in 2005, followed by Cambodia and its unemployment rate was 1.8 percent in 2001. Next, in term of male labour force participation (MLFP) rate, Indonesia has the highest MLFP in the ASEAN and its MLFP rate is 83.76 percent in 2010. Myanmar has the second highest MLFP and its MLFP rate is 82.04 percent in 2007, followed by Vietnam and its MLFP rate is 82.0 percent. By contrast, Cambodia has the lowest MLFP in the ASEAN and its MLFP rate is 72.1 percent in 2001. Brunei has the second lowest MLFP and its MLFP is 76.4 percent in 2007, followed by Singapore and its MLFP rate is 76.5 percent. Finally, in term of female labour force participation (FLFP) rate, Vietnam has the highest FLFP in the ASEAN and its FLFP rate is 73.0 percent in 2010. Cambodia has the second highest FLFP and its FLFP rate is 64.4 percent in 2001, followed by Thailand and its FLFP rate is 64.2 percent. By contrast, Malaysia has the lowest FLFP in the ASEAN and its FLFP rate is 46.1 percent in 2010. The Philippines has the second lowest FLFP and its FLFP rate is 49.7 percent in 2007, followed by Myanmar and its FLFP rate is 49.8 percent in 2007.

TABLE 2: LABOUR MARKET CONDITION IN ASEAN (2010)

Country Labour Force

(thousand)

Employed workers

(thousand)

Unemployment Rate

(percentage)

Male Labour Force Participation (percentage)

Female Labour Force Participation (percentage)

Brunei 198 193 2.6 76.4 58.0

Cambodia (2001)

6,309 6,243 1.8 72.1 64.4

Indonesia 116,527 108,207 7.1 83.7 51.7

Laos (2005) 2,776 2,738 1.3 n/a n/a



Malaysia 11,517 11,129 3.4 78.7 46.1

Myanmar (2007)

n/a n/a 4.0 82.0 49.8

Philippines 38,894 36,025 7.4 78.5 49.7

Singapore 3,135 3,045 2.8 76.5 56.5

Thailand 38,643 38,037 1.0 80.7 64.2

Vietnam 50,392 49,048 2.6 82.0 73.0

Source: “Statistical Database System”, from Asian Development Bank (2011) Note: n/a is an abbreviation of the “not available”

This paper consists of five sections. Following this introductory section, the second section examines the creation of ASEAN community. The third uses the theory of economic integration to examine the future of ASEAN. The fourth section is conclusion.

ASEAN INTEGRATION: MAKING OF ASEAN COMMUNITY:

The ASEAN integration started as an informal production network led by Japan after the World War II. This production network was known as the “Flying Geese” pattern of economic integration, which, in effect, could be regarded as the first attempt at ASEAN integration (Furuoka, 2005). According to Furuoka (2005), it took decades for Japan to restore its economy after the war. The huge US market has been vital for Japan’s export-related industries. In order to bolster its increasing economic power, Japan embarked on creating a production network in East Asia. Zhang (2011) pointed out that Japan played a leading role to create the “Flying Geese” production network in East Asia. This production-based economic integration could explain the rapid expansion of inter-regional and inter-industrial trade in the region. More importantly, the “Flying Geese” pattern of economic integration in ASEAN is a result of market force. There is no formal mechanism for the economic integration in ASEAN. However, the “Flying Geese” pattern of economic integration was destroyed by the Asian Financial Crisis of 1998-1999. Simon Tay (2002) commented that the Asian economic crisis has scattered the flock of geese that followed the Japanese model of development. On the other hand, formal process of ASEAN integration took place by creating the free trade area in the ASEAN or so-called the “ASEAN Free Trade Area” (AFTA). According to the Ministry of International Trade and Industry (MITI), Malaysia, the creation of the AFTA started in 1992. The six countries of ASEAN member countries or so-called ASEAN-6, namely Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand, signed the AFTA agreement at the ASEAN Summit in Singapore on January 28, 1992 (MITI, 2011). There are three main objective of creating of the AFTA. The first objective of the AFTA is to establish a single market in the South East Asia. The second objective of the AFTA is to attract multinational corporations (MNCs) to invest in the region. Third objective of the AFTA is to increase international trade and investment among ASEAN countries (MITI, 2011). According to Malaysia’s MITI, the creation of the AFTA is the ASEAN countries’ response to the emerging other economic integration in other regions, such as the North American Free Trade Agreement (NAFTA) or the expansion of the European Union (EU) (MITI, 2011). Under the Common Effective Preferential Tariffs (CEPTs) scheme, the ASEAN-6 countries successfully lowered intra-region tariffs. The tariff rates of more than 99 percent of all products in the CEPT inclusive list have been brought down to 0-5 percent range by January 1, 2010 (ASEAN, 2011d). At the Ninth ASEAN Summit at Bali, Indonesia on October 3, 2003, ASEAN leaders agree to establish the ASEAN Community by signing a declaration known as the Bali Concord II. There are three pillows of the ASEAN Community, namely 1) political and security cooperation, 2) economic cooperation and 3) socio-cultural cooperation (ASEAN, 2011e). Furthermore, at the Twelfth ASEAN Summit at Cebu, the Philippines on January 13, 2007, the ASEAN leaders agreed to accelerate the creation of the ASEAN Community by 2015 by the signing of another declaration known as the “Cebu Declaration on the Acceleration of the Establishment of an ASEAN Community” (ASEAN, 2011f). The ASEAN leaders signed the constitution of the ASEAN community, the “ASEAN Charter” at the Thirteenth ASEAN Summit at Singapore on November 20, 2007, (ASEAN 2011g). The ASEAN Charter can be considered as a firm foundation of the ASEAN community by providing its legal and institutional framework (ASEAN, 2011g). In other words, the adaptation of the ASEAN Charter would transform the ASEAN integration from the market force-based regional organization into the regulation-based one. However, Pushpanathan commented that the ASEAN Charter is a “form” rather than “substance”. The substantial outcome would be achieved only after the regulation and institution would become more mature (Pushpanathan, 2009).



More importantly, the ASEAN Charter would ensure that the ASEAN member countries would speak out other member countries’ political situation. The ASEAN Secretary-General Surin Pitsuwan commented that the ASEAN member countries could not discuss about the internal matters of each member in the past. However, after the adaptation of the ASEAN Charter, the ASEAN member countries are able to express their concerns, to give warnings, to ask for explanations (Hotland, 2008).

ASEAN INTEGRATION AND ITS IMPACTS ON WORKERS:

There are four stage of economic integration. The first stage of economic integration is known as the Free Trade Area (FTA). The main characteristic of the FTA is that all member countries will remove the tariffs on other member countries’ products. However, each member country would retain its independence in imposing individual tariffs on non-member countries’ products (Appleyard, et al, 2006; Holden, 2003). The second stage of economic integration is known as the Custom Union (CU). The main characteristic of the CU is that all member countries will remove the tariffs on member countries’ products. At same time, all member countries would impose same tariffs on non-member countries’ product. This tariff is called the “Common External Tariff” (CET) (Appleyard, et al, 2006; Holden, 2003). The main purpose of the CET is to prevent the trans-shipment strategy. When each country imposed on own external tariffs, non-member countries would export a product to the country which has the lowest external tariff. This strategy is called the “trans-shipment strategy”(Appleyard, et al, 2006). The third stage of economic integration is known as the Common Market (CM). The main characteristic of CM is that all member countries will remove the tariffs on member countries and adopt the CET. At same time, member countries remove all barriers to the factor movement among member countries. It means that labour and capital will move freely without barriers in the CM (Appleyard, et al, 2006; Holden, 2003). The final stage of economic integration is known as the Economic Union (EU). The main characteristic of the EU is that all member countries will remove all barriers to the free movements of goods, services, labour and capital and will adopt the CET. At same time, all member country would unify the economic institutions and adopt common economic policies (Appleyard, et al, 2006; Holden, 2003). The four stages of economic integration can be summarised in Table 3.

TABLE 3: FOUR STAGE OF ECONOMIC INTEGRATION

Stages of Economic Integration Main Characteristics Free Trade Area (FTA) No tariffs among member countries

Custom Union (CU) FTA + common external tariff (CET) Common Market (CM) CU + free movement of labour and capital

Economic Union (EU) CM + common economic policy and institution Source: Appleyard et al. (2006) and Holden (2003)

First of all, a famous example of the Free Trade Area (FTA) is the North American Free Trade Agreement (NAFTA). The origin of the NAFTA is the Canada-US Free Trade Agreement which was signed on October 4, 1988. It expanded its membership to Mexico and become the tripartite FTA in 1994 (Cockerham, 2010). Secondly, the well-known example of the Custom Union (CU) is the Southern African Customs Union (SACU). The SACU is the oldest custom union which was established in 1910 and consists of following five countries, 1)Botswana, 2)Lesotho, 3)Namibia, 4)South Africa and 5)Swaziland. The SACU will collect the import duties on products from non-member countries and tariff revenues would be allocated to member countries following a revenue-sharing formula (SACU, 2011). Thirdly, a famous example of the Common Market (CM) is the European Economic Area (EEA) which came into force on January 1, 1994. The CM consists of twenty-seven member countries of the European Union (EU) and three member countries of the European Free Trade Association (EFTA) or so-called EEA-EFTA countries, namely, Iceland, Liechtenstein and Norway (EFTA, 2011). Fourthly, the well-known example of the Economic Union (EU) is the European Union (EU). The origin of the European Union is the European Coal and Steel Community (ECSC) was established by signing the Treaty of Paris on April 18, 1951. There were only six countries in 1951 and currently are twenty-seven member countries in the European Union (EU, 2011). It is very well-known fact that the AFTA have not adopted the Common External Tariff (CET). In other words, the stage of ASEAN integration remains as the first stage of the Free Trade Area (FTA). The free movement of goods and services under the FTA tends to have least direct effects on the workers in the FTA member countries. Furthermore, in 2003, ASEAN leaders agree to establish the ASEAN Community by 2020. However, the



ASEAN Community would not a “complete” Common Market in the all member countries would remove all barriers for the goods, service, labour and capital. In other words, the ASEAN Community would be a single market in which all member countries would remove barriers for goods, services and capital (Cockerham, 2010). It should be noted that ASEAN leader carefully excluded the free movement of labour under this “incomplete” Common Market named ASEAN Community. These facts seem to indicate that ASEAN integration would have some indirect impacts on the employment situations and working conditions through foreign direct investment or international trade. However, ASEAN integration, so far, would have minimum direct impact on workers in ASEAN countries because the free movement of workers was carefully excluded from discussion and negotiation of making ASEAN Community.

CONCLUSION:

ASEAN is one of the most successful and most ambitious economic integration in the world. This paper examined the ASEAN integration and its impacts on the workers in the region. It used the theories of economic integration to explain how the economic integration would effect the employment situations and working conditions of the workers in the ASEAN countries. It is interesting to note that it took more than 40 years to create the Free Trade Area (FTA) in the region after the establishment of ASEAN in 1967. Moreover, it is very well-known fact that the AFTA still have not adopted the Common External Tariff (CET). The free movement of goods and services under the FTA tends to have least direct effects on the workers in the FTA member countries. Furthermore, in 2003, ASEAN leaders agree to establish the ASEAN Community by 2020. However, ASEAN leader carefully excluded the free movement of labour under this “incomplete” Common Market named ASEAN Community. In short, these facts seem to indicate that ASEAN integration would have some indirect impacts on the employment situations and working conditions through foreign direct investment or international trade. However, ASEAN integration, so far, would have minimum direct impact on workers in ASEAN countries because the free movement of workers was carefully excluded from discussion and negotiation of making ASEAN Community.

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MANAGEMENT OF MICRO-ENTERPRISES

(A STUDY ON INDIRA KRANTHI PATHAM IN SRIKAKULAM

DISTRICT – ANDHRA PRADESH)

Dr.S.Tarakeswara Rao,

Faculty Member, Dept. of Commerce & Management

Studies, Dr.B.R.Ambedkar University-Srikakulam, Pin – 532 410

Andhra Pradesh-India.

Dr. G.Tulasi Rao,

Professor & Head, Dept. of Commerce & Mgt. Studies

Dr.B.R.Ambedkar University-Srikakulam, Pin – 532 410

Andhra Pradesh-India.

ABSTRACT

The Government of India had ushered in the new millennium by declaring the year 2001 as 'Women's Empowerment Year' to focus on a vision 'where women are equal partners like men'. The most common explanation of 'women's empowerment' is the ability to exercise full control over one's actions. The last decades have witnessed some basic changes in the status and role of women in our society. There has been shift in policy approaches from the concept of 'welfare' in the seventies to 'development' in the eighties and now to 'empowerment' in the nineties. This process has been further accelerated with some sections of women becoming increasingly self-conscious of their discrimination in several areas of family and public life. They are also in a position to mobilize themselves on issues that can affect their overall position.

Keywords: Indira Kranthi Patham, Micro-enterprise, Micro-finance, Women empowerment, entrepreneurship, Self Help Group.



INTRODUCTION:

Micro-finance (MF) is directly influences the quality of life and is therefore considered to be a powerful tool for bringing about socio-economic transformations in the society especially in the rural areas, the MF movement can be traced to Bangladesh and later years in Brazil. Muhammad Yunus a college professor with Chittacong University in Bangladesh began the concept of micro-credit (MC) for a small group of 42 people lending them US$ 27 only in the year 1976. Later the concept of Grameen bank spread all over the world. Today Grameen bank serves 43,000 villages across Bangladesh and gives loans to 2.8 million borrowers, 96 per cent of whom are women. They have disbursed more than US$ 4 billion to borrowers in a cumulative way of which US$ 3.6 bullion has been paid back. The Bank lends US$ 34 million every month as new loans. The recovery rate on such loans is 98 per cent. This was the second annual event of what is now becoming a large annual gathering to celebrate successes, discuss perspectives and research, and build networks around the MF sector in India. Reconnecting after a few years, I was pleased to see the entire buzz about MF and the number and diversity of stakeholders who collaborated on the conference. The number and diversity of delegates, the level of participation from senior policy makers and bankers and the quality of debates and media attention confirms that MF is no longer at the periphery of the financial sector in India. This short note is a personal reflection on what has changed, what may take a long time to change and what India and the rest of the world may learn from each other.

MICRO-ENTERPRISES - THE CONCEPT:

A ME is a very small business unit run by an owner of modest means, usually with few or no other employees. Common activities include dairy, poultry, sheep rearing, tailoring, fish fending, and sale of forest products, bullock trading, pig rearing, child care, catering, cosmetology, or cleaning services. The ME excludes one person small businesses owned by professionals such as doctors, lawyers, or computer programmers, and it also excludes hobbyists-such as those selling hand-made arts and crafts at weekend shows-who are not really trying to make money. Some valuable lessons can be drawn from the experience of successful MF operation. First of all, the poor repay their loans and are willing to pay for higher interest rates than commercial banks provided that access to credit is provided. The solidarity group pressure and sequential lending provide strong repayment motivation and produce extremely low default rates. Secondly, the poor save and hence MF should provide both savings and loan facilities. These two findings imply that banking on the poor can be a profitable business. However, attaining financial viability and sustainability is the major institutional challenge. Deposit mobilization is the major means for MF institutions to expand outreach by leveraging equity. In order to be sustainable, MF lending should be grounded on market principles because large scale lending cannot be accomplished through subsidies.

AN EVALUATION OF INDIRA KRANTHI PATHAM:

The Indira Kranthi Patham (IKP) (A women development programme named late prime minster of India Smt.Indira Gandhi) came in to force during the year 2005 as a new concept with much broader scope and objectives to meet the overall financial and needs of the rural poor. The activities of DWCRA (Development of Women and Children in Rural Area) and Velugu were integrated under programme called IKP. The IKP is an integrated concept for socio-economic development of rural women. The IKP is not a contingency plan of action but a long range strategy aimed for sustainable development based on financial self religance and self supporting basis. The vision of the IKP in short is “to provide the required micro financial services for the poor people could be met through their self-managed and financially sustainable Micro Finance Institutions (MFIs) to make them to live a better way of life”. For this cause, IKP-DRDA (District Rural Development Agency) project will act as a catalyst by providing innovative and quality services and serving as a guiding model. The required financial services viz., savings, credit and insurance will be met through their self-managed and financially sustainable MFIs.

SHGs FOR EMPLOYMENT OF THE POOR:

SHGs consist of members who are poor, having low savings capacity and generally depending on money lenders or private sources for meeting their consumption and emergent needs. A typical SHG will comprise like-minded individuals who volunteer to save small amounts of money in a common pool, out of which, need based loans are given to members for meeting their emergent credit requirements based on the priorities decided by the group. The group members take collective decisions on all matters including those relating to terms of credit viz., purpose, size, interest rate and repayment period. They exercise close supervision on utilization of loans



and exert peer and moral pressure on members to continue savings and repay loans promptly on time. In other words, SHG can be referred to as a group of poor persons who own, manage and control a micro bank of their own.

PROFILE OF THE SRIKAKULAM DISTRICT:

Srikakulam District, which is located in the north-eastern part of Andhra Pradesh, is one of the back ward districts of the state, despite its natural resources and other potential which are yet to be exploited. It is bound on the North by Orissa State, on the West and South by Vizianagaram District and on the East by Bay of Bengal. The total area of the district is 5837sp.kms. Administratively, the district is divided into three Revenue Divisions viz., Srikakulam, Palakonda and Tekkali with 38 constituent mandals comprising of 1870 villages of which 1767 are inhabited. There are 11 semi-urban units in the District, of which 4 are Municipalities and 7 are notified major panchayats (elected governing village councils) and 1053 are minor gram panchayats.

SCOPE OF THE STUDY:

There are a few studies made particularly in Andhra Pradesh by the government agencies that have evaluated the impact of these women development programmes. However, these studies fall to bring out the chronic inadequacies in the implementation of the programmes. Therefore, it is necessary to evaluate thoroughly the women development programmes such as IKP in the state of Andhra Pradesh, which has voter Self Half Groups. This article attempts to study the importance of SHG’s in Srikakulam in the state on selective basis with a view to thoroughly evaluating the role of IKP in socio-cultural & economic development of women at the grass-root level.

RESEARCH GAP:

Only a few studies have been undertaken during the past years on SHGs and women development and their standard of living. Each study has its own limitations. One common lacuna was that many studies were case studies covering women problems in general. Secondly the authors of various studies did not provide uniform data. Some relied on State government figures and some on Central Government figures. They were not based on primary data. Present study is devoid of such limitations and examined the following:

1. The living conditions, life-style and socio-economic characteristics of rural women. 2. The problems and causes for poverty and indebtedness among rural women and scope for alleviating

them. 3. The role of Indira Kranthi Patham and District Administration in relation to women development by

way forming SHGs. 4. The problems of rural women.


As pointed out earlier the SHG was designed to raise the living standard of poor people with more focus on poor women. This study tries to find out to what extend this programme has succeeded in realizing the following objectives. More specifically the study has the following objectives:

1. To evaluate the role of IKP scheme in the development of SHGs. 2. To study the impact of SHG on generation of additional income, additional employment, on

mobilization of savings and investment on the creation of assets and their repayment performance in the member household.

3. To study the socio-economic profile of the rural women entrepreneurs. 4. To study the profile and nature of MEs. 5. To evaluate the performance evaluation of business enterprises carried by rural woman entrepreneurs. 6. To study the operational problems and remedial measures for successful conduct of MEs. 7. To suggest measures for development of MEs for the socio economic development of women under

IKP programme.



METHODOLOGY:

Srikakulam District was selected for the purpose of the present study. The operational methodology adopted for this study was as follows. The study covers the district of Srikakulam in Andhra Pradesh state. However micro aspects of SHG member’s economic condition and standard of living have been included in the study. For this purpose this study was conducted at three levels applying survey research methods. The first was mandal level where mainly historical research method was adopted. At the second level is panchayat level. Each panchayat was selected for in depth study. At the third level SHGs were selected for the study. The impact of government development programmes on SHGs and rural women development were also examined. For selection of SHG in Mandals, three criteria have been adopted. They are as follows.

1. Proximity of the SHG with all facilities including literacy. 2. SHG members having the formal education and low infrastructural facilities. 3. SHG members who are ignorant to avail Government facilities.

A list of SHGs in all 38 mandals of the District was collected from the official records of District Rural Development Agency (DRDA), Srikakulam. While selecting the DWCRA groups the followed criteria have been followed:

1. The group must be in existence for more than three years. 2. The group must have undertaken income-generating activities. 3. The group must have bank linkage. 4.

SAMPLE SELECTION:

Lack of time tampered studying all the SHGs in the selected Mandals. Therefore it was decided to study 75 SHGs per Mandal of the district. Totally 750 SHGs (10X 75) were selected in random from the total SHGs of 31,423 in this district. Multi-stage stratified sampling method is used for date collection.

DATA COLLECTION:

The study is based on survey research method. The analysis of overall status of the SHG’s and its development status in the district is based on the secondary sources of the information like the published reports and documents of DRDA-Srikakulam Collectrate of Srikakulam and office of the Chief Planning officer-Srikakulam, Directorate of Economics and Statistical, Hyderabad, V.S.Krishna memorial library Andhra University, Visakhapatnam and other concerned governmental and non-governmental agencies. Since the focus of the research is on to study the impact of MF and MEs on socio-economic upliftment of rural women, the researcher was faced with a hard choice from among the following three methods for obtaining data.

1. Total dependence of Mandal records and other sources of data. 2. Interviews with all officials concerned and to aggregating their responses on a particular variable. 3. Interviews with selected respondents of a village.

The interview method opted for in-depth study. The first two methods are used to enhance the quality of the data, the SHG of the selected Mandals were interviewed through a specially designed schedule to obtain primary data about their socio-economic profile and their experience with MF and micro-enterprises. To avoid stereotype, unreliable responses and to get valid information, the researcher held as many informal and extended interviews at possible with elderly members and resourceful respondents. Discussions were also held with the level of members, the officials of cooperatives, Commercial Banks and DRDA of Srikakulam District to generate data. Their opinions regarding developmental activities in the SHGs are also considered. The experience revealed the friendly talk, outdoor trips, some of these best means of collection of original information. All information thus collected was counter checked with reliable persons and other available records.

MANAGEMENT OF MICRO- ENTREPRENEURS:

An attempt has been made to present in this study the results of the analysis made on the empirical data collected from the sample SHG – micro entrepreneurs who availed MF covered under IKP programme. The caste wise representation of the sample reveals the fact that 97 per cent of the respondents belong to socially weaker section and only three per cent respondents come under forward communities. This phenomena is



mainly due to the fact that weaker sections of the society in order to improve their economic status desire to start micro-enterprises by availing the MF simultaneously with their regular occupation. The emergence of women on the economic scene as entrepreneurs is a significant development in the emancipation of women and securing them a place in the society, which they have all along deserved. The hidden entrepreneurial potentials of women have gradually been changing with the growing sensitivity to the role and economic status in the society. Women are increasingly becoming conscious of their existence, their rights and their work situations. The data relating to social status in terms of caste of the respondents is presented in table 1. It is observed from the table that out of 750 respondents, 554 respondents belongs to backward class while 74 per cent of the total, while 173 respondents are Scheduled Castes and Schedule Tribe (23%). The remaining 23 respondents belong to forward castes. The demographic features of the respondents relating age distribution is also presented in the table 1. The age of the respondents varied between 18years and 42 years. The average age of the sample respondents is worked out to be around 36 years. As many as 58.40 per cent of the respondents are found in the age group of 31-40 years, followed by 31.60 per cent who are in the age group of 20-30 years. The table also shows that there are a little over nine per cent of the respondents whose age is above 40 years. Thus it can be concluded that majority of the woman entrepreneurs under study are middle-aged ladies. However, going by the total picture, age does not seem to be a bar as far as one’s entry into entrepreneurial career is concerned. While studying socio-economic profile of woman entrepreneurs, it was considered necessary to evaluate the extent of formal education because the formal education has always been considered as an important factor for an individual in building her operational career.

TABLE.1: AGE-WISE DISTRIBUTIONS OF SAMPLE RESPONDENTS

Age Group Number of Respondents Percentage of Total sample 20-30 237 31.60

31-40 438 58.40 41-50 69 9.20

50 Above 6 0.80

Total 750 100.00

LITERACY LEVELS:

While education is a boon to an individual in a contemporary society, lack of education is a bane to a person. An educated person commands respect while an illiterate person cannot. For a woman entrepreneur education facilitates to keep abreast of the latest happenings in and around the country. An educated person need not depend on others, while an illiterate person has to depend on others either in approaching government officers or in approaching banks. The formal education is always looked upon, as a means to improve one’s socio-economic position in the society. Against this background, an attempt is made in the study to find out the extent of education of the sample respondents. As can be seen from table 2, out of the sample 750 woman respondents as many as 47.73 per cent have no formal education and they are illiterates, but they know only how to sign. Nearly one-fourth of the respondents have formal education between first standard and fifth standard, while a little over one-fourth of the respondents have formal education between sixth standard and 10th standard. On the whole it can be concluded that majority of the woman respondents in the sample are illiterates, and those who have formal education are studied primary and secondary education only. However their low-level of education did not act as a barrier to their entrepreneurial career. Because of poverty coupled with gender discrimination, which is widely prevalent in the olden days especially in rural areas, girl students were not allowed to pursue high school and college education. Now the situation has changed drastically; and even the parents in rural areas are sending their girl children to high school and colleges even though they are located far away from their residential places. It is a fact that entrepreneurship is not a special preserve for the educated, but in the case of women already burdened with many social pressures, education is a powerful tool in breaking down the barriers to successful entrepreneurship. As more women are educated, pressures for change convert or open are exerted on accepted social norms militating against women. Our data also indicates that a good educational background and success in an enterprise are positively related. Good academic background enables the women to deal with the problems in business particularly the initial teething problems in an effective manner. Besides in a country where opportunities are few and the society is male dominated, education plays a vital role in shaping aspirations, ambitions and a sense of achievement among women.



TABLE.2: LEVEL OF EDUCATION OF SAMPLE MEMBERS

Level of Education Number of Respondents Percentage of Total sample No formal Education (only sign) 358 47.73

Below to Fifth 184 24.53

Sixth to Tenth 202 26.94 Intermediate 6 0.80

Total 750 100.00

LEVEL OF INCOME: The data on household income level of sample respondents are given in table.2. It is evident from the table that 59.01 per cent of sample respondent households belong to the lowest income group 5,000-10,000 and rest found in the next group 10,001-20,000.

TABLE.2: HOUSEHOLD INCOME LEVEL OF SAMPLE RESPONDENTS

Income Group Number of Respondents Percentage of Total sample 5,000-10,000 443 59.01

10,001-20,000 307 40.90

Total 750 100.00

Table.3 revels that the level of savings in different age SHG with three groups was falling in 1-3 years, another two groups falling in 3-5 years and remaining groups falling in 5 years above. It could be observed form the table that as the age of the group increases, the amount of savings also increases, and per members savings also increases from Rs. 1158.30 in the junior group (1-3 years) to Rs. 3571.43 in the senior group (5 years above). This increasing trend in savings as reveled in the table indicates the strong thrift habit or willingness of the sample beneficiary for saving after joining the SHG. Whenever comparison is made between levels of savings in different age SHGs by using the population mean savings formula.

Total savings / No.of groups

Population means savings = ------------------------------------ Group size

Hypothesis is more the age of the SHG having more the savings.

TABLE.3: SAVING IN DIFFERENT AGE SHG

Age of SHG (Years) No. of respondents Total Savings (Rs) Per member savings (Rs)

1 – 3 200 2,31,660 1,158.30

3 – 5 275 7,20,993 2,621.79

5 years above 275 9,82,143 3,571.43

Total 750 19,34,736 --

Source: Compiled from Mandal Development Office Records, Collectorate, Srikakulam.

Table.4 shows that the availing of loan from the group savings in all the SHGs. This indicates that the group savings are utilized for lending to their members of the group themselves. The quantum of loan is also smaller than the bank loan is meant for consumption purpose only. It is also evident in the table that not all the members of all the age groups have availed groups loans, however majority of them (53.33 per cent) availed the loan facilities from the savings of the group. Table.5 shows that the bank loan availed by the members of sample SHG representing all age groups with three groups coming under 1-3 years, another two group under 3-5 years and the rest in 5 years above. It could be observed that when the age of the group increases the total amount of bank loan availed also increases. Per member bank loan also increases form Rs. 4665 in the youngest group (1-3 years) to Rs. 6914 in the oldest group (5 years above). This increasing trend indicates the senior members had borrowed more than once after repaying the past loans.



TABLE.4: GROUP LOAN IN SAMPLE SHGS

Group according

to age (years) No.of

Respondents No.of

Members availed Amount of group

loan (Rs) Per member

group loan (Rs) 1 – 3 200 100 6,60,000 6,600

3 – 5 275 150 6,75,000 4,500

5 years above 275 150 7,68,000 5,120

Source: Compiled from records, Collectorate, Srikakulam.

TABLE.5: BANK LOAN IN SAMPLE SHGS.

Group according

to age (years)

No.of

members

No.of Members

availed

Amount of group

loan (Rs)

Per member

group loan (Rs)

1 – 3 200 200 93,30,000 46,650

3 – 5 275 275 1,02,38,250 37,230

5 years above 275 275 1,90,13,500 69,140 Source: Compiled from records, Collectorate, Srikakulam.

The data on functioning of SHGs both in the Mandal and sample 70 SHGs taken up for study reveals a positive impact of SHG approach on women development as follows:

1. There is a growth in the level of savings of the poor women. 2. A thrift habit has been very much uncalculated in the minds of poor women and 3. Joining in the SHG, poor women are enabled to access for loan for consumption purposes immediately

as well as bank loan for income generation activity. In the second part of the study the profile of the sample respondents reveals that majority of them belong to backward castes and are falling in the age group 20-30. Nearly half of them are illiterate and majority of them comes under 5000-10000 income group. THE IMPACT OF BANK LOAN FOR DAIRY ANIMAL DISTRIBUTED THROUGH SHGs: To assess the impact of dairy loan on the standard of living of sample group mandal a comparative analysis has been made with reference to the level of income, consumption, employment assets, savings and repayment position of the sample population before and after analysis. IMPACT ON INCOME:

Generally personal income is the sum of all income actually received by all individuals of the household during a particular year. For the purpose of analyzing the impact on income, the dairy income alone taken into account. Table. 6 reveals that the income generated by the dairy assistance. Table.10 shows that the income generated by the dairy assistance. The sale of milk constitutes main source of income (65.75%). The milk yield is arrived at by multiplying the average milk yield per buffalos per day, with the current prices and again multiplied by the total number of days in which the animal is milking. The other sources of income surveyed the sale of manure and sale of calves comes second with (20.54% and 5.5% respectively) and value of own consumption (8.21%) respectively. Even in the income from the sale of milk, there is considerable variation between different groups. For instance, income from sale of milk for FC and BC is lesser than the SC & ST.

TABLE.6: INCOME GENERATED BY THE DAIRY ASSISTANCE

Castes Average Income from

sale of milk per month

Income from

sale of calves

Value of milk (own

use) per month

Value of manure

per month

Total (Rs)

FC 2250 (65.22%)

700 (20.29%)

300 (8.70%)

200 (5.79%)

3450 (100%)

BC 2400 (65.75%) 750 (20.54%) 300 (8.21%) 200 (5.5%) 3650 (100%)

SC

&ST

2450 (66.66%)

775 (21.23%)

250 (6.8%)

200 (5.44%)

3675 (100%)

Source: Survey Data.



GROSS EXPENDITURE FOR THE DAIRY ACTIVITY:

Expenditure on feeds and fodder has been calculated by obtaining the beneficiaries daily expenses on these items and multiplied by the total number of days in the year without considering whether the animal is milking or not. It may be noted from the table.7, the average annual expenditure maintained the dairy animal by forward castes is Rs. 1650, and for the backward castes Rs.1590 and for the Scheduled Castes and Schedule Tribe it is Rs.1475. the difference in socio-economic conditions of the respondents is the main course for the difference in their expenditure. Among the items of expenditure, feeds and fodder takes a lion’s share constituting 67.89 per cent of total expenditure towards the maintenance of dairy. The next item namely the labour and milking charges constitutes 15.16 per cent. It is followed by veterinary cost 4.41 per cent. The item “Insurance” constitutes 8.07 per cent of total expenditure. Lastly others cost 4.47 per cent of the total expenditure is worked for each group (average). The difference between the gross dairy incomes minus gross dairy cost as the surplus on net income, which worked in table.7.

TABLE.7: GROSS EXPENDITURE FOR DAIRY ACTIVITY (PER ANIMAL)

Sources of

Expenditure

Forward Castes Back ward castes Scheduled Castes Average

percentage

(1+2+3)/3 Expen

diture

% of total

expenditure(1)

Expend

iture

% of total

expenditure (2)

Expen

diture

% total

expenditure(3)

Feeds & Fodder

1100

66.67

1100

69.2

1000

67.8

67.89

Labour & Milking charges

300

18.18

220

13.8

200

13.5

15.16

Veterinary Charges

60

3.64

60 3.8 85 5.8 4.41

Insurance 127 7.70 127 7.9 127 8.6 8.07

Others 63 3.81 83 5.3 63 4.3 4.47

Total 1650 100.00 1590 100.00 1475 100.00 100.00

Source: Survey Data.

The total income or surplus generated from the dairy activity is given in the last column in the table.8 (Income Flow). The surplus is Rs.1090 for forward castes and Rs.1230 for backward castes and the rest Rs. 1450 in Scheduled castes. Comparatively, in the case of OC, the survey may be very low due to high cost of maintaining the animals. The cost of maintaining the animals is Rs.1650, for forward castes, Rs.1590 for backward castes and the rest Rs1475 for schedule castes and schedule tribe. The cost benefit from dairy loan is Rs. 2740 for other castes and Rs.2820 for BC and Rs.2925 for Scheduled castes and Schedule Tribe. The average benefit is Rs.2821.5 and the average cost is Rs.1571.50 for all the respondents. Therefore the average surplus is Rs.1256.5 for all categories.

TABLE.8: INCOME FLOW (PER MILK ANIMAL) (IN RUPEES)

Category Benefit Cost Surplus

FC 2740 1650 1090

BC 2820 1590 1230

SC & ST 2925 1475 1450

Total 8465 4715 3770

Average 2821.5 1571.5 1256.5 Source: Survey Data.

COST-BENEFIT RATIO: A Cost-Benefit analysis can help us to calculate and estimate the rate of return every rupee spent. When the return is more than the cost, we infer that there is a surplus flow of returns.

Net Income

Cost – Benefit Ratio = ---------------

Total Cost



The cost-benefit ratio for the groups is presented in Table.13. The cost benefit ratio is shown in the last column in table.9. It implies that for every rupee spent on dairy activity, there is a net income of Rs.0.69 for other castes, Rs.0.77 for the backward castes and scheduled castes and schedule tribe for Rs. 0.98 respectively. From the table, it is understand that the cost – benefit ratio is very favorable to scheduled castes compared than other castes. However, under SHG programme the women prefer dairy loans under IKP and they will be much benefited, as there is substantial benefit in this scheme as empirically shown above. This would also help the women to enhance their standard of living.

TABLE.9: THE COST-BENEFIT RATIO

Castes Net Income (month) Total Cost (in rupees) Cost-Benefit Ratio

FC 1090 1650 0.66 BC 1230 1590 0.77

SC & ST 1450 1475 0.98 Source: Survey Data.

INVESTMENT – GROSS INCOME RATIO: Table.10 presents the incremental gross income and investment gross income ratio for different castes namely other castes and scheduled castes. We have computed the incremental gross income and investment gross income ratio over an investment of Rs. 2500 on a single milk animal of an average quality and the capital output ratio. The capital output ratio is favorable to both the groups due to low cost of maintenance of milk animal.

TABLE.10: INVESTMENT GROSS INCOME RATIO

Castes Average initial

income level

Investment one

milk animal

Incremental gross

income

Incremental gross

income ratio

FC 2750 2500 1090 2.29

BC 2500 2500 1230 2.03

SC & ST 2250 2500 1450 1.62

Source: Survey data.

AVERAGE AND MARGINAL PROPENSITY TO CONSUME OF THE RESPONDENTS UNDER THE

DAIRY ASSISTANCE: Average propensity to consume refers to the total amount of consumption expenditure out of the given total income at a particular period. Marginal propensity to consume is the incremental change in consumption as a result of a given incremental income. It refers to the additional consumption out of a given additional income. In short, the average propensity to consume is the ratio on consumption of income, the marginal propensity consume is the ratio of charge in consumption to change in income.

Past Consumption C1

Average propensity to consume = ----------------------- = -------- X 100 Past Income Y1

One Consumption C C2- C1

Marginal propensity to consume = ----------------------- = ------- = ------- Additional Income Y Y2 - Y1

The normal relationship between income and consumption is that when income rises, consumption also rises but to an extent smaller than rise in income. Past consumption, average present consumption, income (increment in income level), consumption (increment in expenditure level), APC (Average Propensity to Consume), and MPC (Marginal Propensity to Consume) of the sample members of the SHGs. When there is an increment of income of sample borrower due to dairy activity, the expenditure of the sample also increases. The APC for the sample respondents are 94.91 per cent, 97.00 per cent and 93.3 for FC, BC and SC&ST respectively. The Marginal propensities to consume of sample beneficiaries are 0.89, 0.90, and 0.80 respectively.



TABLE.11: THE APC AND MPC OF THE RESPONDENTS UNDER DAIRY ASSISTANCE

Caste

Past

Income

Y1

Past

Consumption

C1

Present

income

Y2

Present

Consumption

C2

Y

Income

Y2 - Y1

C

Income

C2- C1

APC

C1

----- X 100

C2

MPC C

------ Y

FC 2750 2610 3300 3100 550 490 94.91 0.89

BC 2500 2430 2900 2790 400 360 97.20 0.90

SC &ST 2250 2100 2500 2300 250 200 93.33 0.80

IMPACT ON EMPLOYMENT:

The most meaningful way the bulk of the poor women can be provided greater income to enable them to raise above poverty is greater opportunity of employment. Once large-scale opportunity for greater earning through wage employment is created for the poor women, this will create greater purchasing power for them and large market for the commodities produced in rural areas. The dairy assistance under IKP through SHG creates additional employment to the women beneficiaries, besides creating additional income. The dairy enterprise could be a better means of providing fruitful employment to the rural people who are living below the poverty line. The increased employment of the women beneficiaries is estimated and measures in terms of man-days before the dairy loan and after the dairy assistance. The following table 12 presents information regarding employment generation due to implementation of dairy assistance under IKP through SHGs. From the table.12 it is understood that a total of 200 man-days in a year has been created for Other Castes and 240 man-days for Backward Castes. It was only 230 man-days for Scheduled Castes &Schedule Tribe, before the implementation of dairy assistance. There has been additional increment of 70 man-days for Forward Castes, 60 man-days for Backward Castes and 95 man-days for Scheduled Castes & Schedule Tribe after the dairy assistance in the sample mandals. The average man-days in a year for all castes 223.3 men-days in a year and now it is 298.3 man-days for these women respondents after the implementation of dairy assistance. There have been additional man-days of 75.0 for all in a year. There has been a reduction in dependency in the women beneficiary households as a direct result of dairy assistance availed through SHG.

TABLE.12: EMPLOYMENT GENERATION BEFORE AND AFTER DAIRY ASSISTANCE

Castes Man-days before

Dairy loan

Man-days After

loan

Increment of

mandays

FC 200 270 70

BC 240 300 60 SC & ST 230 325 95

Average 223.3 298.3 75

IMPACT ON REPAYMENT OF LOAN:

The success of dairy assistance depends not only on the generation of additional income and additional employment for the benefits of respondents but it depends on the prompt repayment of the loan by the respondents. Prompt repayment of the loan is all the more important because the extension of the benefit of the programme to other respondents depends on this vital aspect. So an attempt is made during the survey to fund out the extent of repayment of loan by the respondents. All the 750 respondents under dairy loan are the members of the cooperative milk societies and therefore there is no difficult in marketing the milk and paying the loan amount to the banks on behalf of the respondents. The following table.13 gives the Recovery Performance of Sample women respondents. Table.13 shows that the recovery performance for group loans was 100 per cent. The high percentage is because, the members feel that their money is lent among themselves and so it should be repaid promptly. Another reason for good recovery is also due to the fact that the prompt repayments of group loan make them eligible to avail bank loan for any income generating activity preferred by them.



TABLE.13: REPAYMENT PERFORMANCE OF SAMPLE WOMEN RESPONDENTS (AMOUNT IN

RUPEES)

Caste Group Loans Bank Loans through SHG

Amount Repay-ment Percent of recovery Amount Repay-ment Percent of recovery

FC 5300 5300 100 50000 45000 90.00%

BC 5300 5300 100 52000 40000 76.92%

SC & ST 5600 5600 100 50000 44200 88.40%

OPINION / ATTRIBUTES:

Following are the opinions elucidated from the sample respondents: 1. The sample respondents expressed that joining into SHG has a substantial impact on their socio-

economic profile. 2. They felt that availability of loans at any point of time and their effective utilization helped them to

increase their income and savings. 3. The sample women respondents belonging SC & ST opined that their husbands give respect to them as

their enjoy the social status. 4. Respondents belonging to socially suppressed communities (Schedule Caste, Schedule Tribe &

Backward classes) are of the opinion that economic empowerment helped them in social upliftment. 5. Participation in periodic group meetings helped them to increase their awareness on various social

programmes besides solving the credit related programmes. 6. Although majority of the women respondents agreed that the officials from DRDA and Banks helping

them significantly, a few of them expressed the need for greater coordination and cooperation among all the stakeholders.

7. Almost all the respondents expressed the need for increasing the subsidy in percentage terms in IKP funding.

8. Nearly three fourths of the respondents expressed that there should be greater thrust on practical training in the areas of poultry, dairy and other income generating activities before sanctioning the loans.

9. Majority of the respondents is of the opinion that every literate group member should be trained in maintaining the various records and registers which help them to know detailed information about various financial activities such as loans repayment, outstanding balance etc.

10. About 20 per cent of respondents suggested that the government officials from DRDA, IKP should attend the SHG meetings at least once in three months to explain various features of development programmes offered by them.

11. Many respondents opinioned that the collection of milk should be done by Government functionaries for ensuring for continued marketing with assured income and fair price.

CONCLUSION:

Before the formation of SHGs the situation was that the whole family was dependent upon the male member. But after the advent of the SHGs the women are able to manage their family better even without their spouse. Women of the SHG can be said to have been empowered since they have become owners of a ME from the status of agriculture labourers. Their income has increased after taking up economic activities in MEs. Improvement in their attitude and behaviour through the socialization process and participation in decision making affairs of the family as the other members of the family consults or hears to the views of the female. The study proved that women have tremendous energies to start and conduct their own ME given the right opportunities. They have developed a sense of unity, abundant self confidence and self esteem through SHG movement. Not only economic poverty but also social and gender issues can be tackled effectively. The success of the SHGs in terms of high repayment is mostly related to the exploitation of prevailing social ties and social cohesion found among women members. The status of women both within the household and outside has improved. Setting up of a small manufacturing unit with state administration may prove to be easy but sustaining the unit and turning the initiative into a profitable venture is very difficult. Big MNCs are flooding the local market with their products. There is no level playing field. Any economic activity by the SHGs has to be supported by the Government and it cannot be a temporary relationship. This will only lead to a bigger blow



to the SHGs later. The IKP scheme has all the usual ingredients like target, subsidy, bureaucratic and political involvement in the credit, insistence on entrepreneurial income generating activity and most importantly, lack of understanding of the nuances of rural financial requirements. What is ignored is that these areas lack profitable investment opportunities. These opportunities need to be created first before thrusting upon anyone investment credit.

SUGGESTIONS:

Every activity has some hurdles for implementation, even in the development of MEs, there is some hurdles and following few suggestions are made which felt to contribute to the development of the MEs and the spreading of MF activities more rapidly and effectively. The working conditions of all the ME started by SHG members are either poor or inadequate.

� Since some of the members are illiterate, the officials from DRDA, IKP and Commercial Banks periodically visit the location of MEs and train them on book keeping and maintenance of accounts and conducting awareness programmes on latest schemes and developments.

� Private MFIs are charging very high rate of interest i.e 24 per cent which affects the financial sustainability of the micro units (MUs). Hence necessary steps are to be taken to assure the MUs to avail the sufficient finance at a marginal rate for a certain period (gestation period).

� The implementer should monitor not only the disbursal of money, but also the end-use of money for productive income generating activities/ MEs.

� Policy makers need to recognize the potential of micro financial services to support investment and growth in key economic sectors and hence to contribute significantly to national economic growth.

� Considering the consumption expenses of the respondents which are quite large in relation to their income, provision may be made for giving consumption loans under IKP scheme.

� Due to variation in the price of different quality animal, the loan amount should be as per member’s actual requirement. The recommendations of the group members should also taken in to account which fixing the cost of the dairy unit.

� In addition to the institutional sustainability, the group should also become financially viable. Financial sustainability of the group is achieved when the group is able to meet its operational costs from its income.

� In order to encourage more women towards setting up of MEs the subsidy amount should be increased and at the same time the subsidy should be linked to the promptness of the repayment.

� The State government should give necessary instructions to the developmental agencies to co-operate with the financial institutions in conducting recovery drives.

� Banks and IKP functionaries at the field level need to synergize their efforts that will strengthen the programme and the branch officials should make effective use of tools like of community based recovery mechanism for sustaining the recovery performance.

� A portion of the income generated out of the IKP financed activity should be used for the further development of the business/economic activity.

� There are number of groups with more than six years of experience. The government departments and banks should encourage them and sensitize to increase their quantum of thrift / savings.

� The IKP scheme may concentrate more on women self-employment income generation activity to empower the women.

� Present repayment structure is not suitable for promotion of MEs. Though the loan recovery period is fixed for 36 installments but in reality the loan is recovered in 18 to 24 monthly installments.

� It is necessary to reduce the influence of the private money lenders by taking measures such as further branch expansion, motivating the staff to be more receptive and responsible and by giving promotional and financial incentives linked with their loan recovery performance.

� There is a need to tighten the supervision and monitoring mechanisms and provide greater autonomy in the operation of credit institutions to improve their lending policies and procedures.

� Establishment of marketing information centre at district level for enhancing the opportunity of marketing outside of locality.

� Up gradation of quality of low cost products with enhanced capacity of artisans to face global threat.



� Government should provide infrastructure for training of SHG members in ME as also marketing infrastructure for marketing of the products.

� Multiple Enterprises development programmes are to be organized so that awareness for setting up of MEs could be attained.

BIBLIOGRAPHY:

[1] Anitha Prasad,T(2005), “Emerging Trends in Microfinance – A Case study of Swayam Krishi Sangham”, Osmania, Journal of Management November 2005, Vol.4 No.4 Published by Department of Business Management, pp171-180.

[2] Dasgupta, Rajaram (2005), “Micro Finance in India: Empirical Evidence, Alternative Models and Policy Imperatives”, Economic and Political Weekly, 40(12), March 19-25:1229-1237.

[3] Falendra K.Sudan, ‘Empowering Rural Women through Micro Enterprise Development’, Social Change and Development, Vol.3 July, 2005.pp54-73.

[4] Femida Handya and Meenaz Kassamb. (2004) “Women’s empowerment in rural India” paper presented as the ISTR conference, Toronto Canada July, 2004.

[5] Financing Micro-finance – the ICICI partnership model- Small enterprise development Vol.16, No.1 March, 2005.

[6] Fisher.T.and Sriram.M.S. (2002), Beyond micro-credit, putting development back into micro finance, Vistaar Publications, New Delhi.

[7] Ghule & V.Mahajan, “Microfinance – A Tool for Alleviation in the Globalised Scenario – Focus on Woman SHGs”, Indian Commerce Bulletin, December 2004, pp36-44.

[8] Growth and challenges faced by Micro-Finance – Journal of IMS group. [9] Hannover, W.(2005), Impact of microfinance linkage banking in India on the Millenium Development

goals. NABARD. [10] Jagdish kapoor, “Development Issues in Micro-Credit”, Bank Credit – Emerging Trends, ICFAI

Publication 2002, pp 21-26. [11] Jarinabi,U and Kanniammal.K. (2008), “Micro finance and empowerment of Muslim women: A study

of SHGs in Coimbatore city of Tamil Nadu”, The Indian Journal of Commerce, p.p 16-26,Coimbatore. [12] Jayaraman,B. (2001), Micro finance: Retrospect and Prospects, Occasional paper-20.NABARD. [13] Jha,T.N: “Micro credit finance models in Bangladesh: Lessons for Indian” – Yojana Feb -2002. [14] Journal Published by the SERP-Hyderabad. [15] Karmakar, K.G. (1999), “Rural credit and Self-Help Groups, micro finance needs and concepts in

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Challenges”, Asian Economic Review December 2005, Vol.47.No.3, pp.445-455. [17] Malcolm Harper and Dr.Manoj Nath. (2004), “Inequity in the Self-Help Group Movement – a view

form India’s Centre”, Shelter, Vol. No.1 pp.14-24. [18] Meher, Shibalal (2007), “Impact of Micro Finance on Poverty: A Study of Self Help Groups in Orissa”,

Journal of Rural Development, 26(3), July-September:315-333. [19] Mohanthy B.B, Sukhdeve M.L and Manikumar S. (2005), “Mega Socio-Economic Transformation

through Microfinance the NABARD experience”, Focus, October 2005, pp 9-22. [20] Mostofa Kamal.Md, Mohammad. Shamsuddoha & Tasnuba Nasir: “NGOs and Women: An Evaluative

study on ASA and BRAC in Bangladesh” [21] Muhammad Yunus, ‘Grameen Bank, Micro credit and Millennium Development Goals’ Economic and

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Poverty Alleviation”, the Bangladesh Public Administration Journal, Vol IV, No.2, July 1990, pp 52-74. [23] NABARD, Micro Credit Innovations Department (MCID) (2007), Progress of SHG-Bank Linkage in

India 2006-07, and earlier years form 2002-03. [24] http://www.indirakranthipatham.com [25] http://www.microenterprises.com [26] http://www.microfinance.com [27] http://www.nabard.org/pdf/introduction05-06.pdf [28] http://www.rd.ap.gov.in.com.

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THE IMPACT OF TOTAL QUALITY MANAGEMENT

COMPONENTS ON SMALL AND MEDIUM ENTERPRISES’

FINANCIAL PERFORMANCE IN JORDAN

Dr. Yaser Mansour Almansour,

Al Balqa Applied University,

Amman – Jordan.

ABSTRACT

Total Quality Management (TQM) is increasingly lambasted by management

gurus and the business media for a lackluster impact on the bottom line. The question of whether the adoption of TQM improves financial performance has been discussed for

several years.However, most research has examined large organizations, and it has been

recognized that TQM studies on small and medium enterprises (SMEs) is limited (Parkin

and Parkin 1996; Walley 2000). This paper presents a study of the impact of TQM

components on small and medium enterprises’ financial performancein Jordan while also

providing a review of global TQM research.

Keywords: TQM, SMEs, Global TQM, Jordan



INTRODUCTION:

Since the 1980’s, when the Total Quality Management (TQM) concept was first defined, (Deming, 1986, Crosby,

1979, Juran, 1986), practitioners and researchers tried to give more definitions to defend this business philosophy, the

first organic ground based system that emphasizes a systems approach to quality. TQM is a set of techniques,

principles, processes, and best practices that over time have been proven effective (Rao et al., 1996). TQM utilizes techniques that improve as well as get better product quality and processes and thereby help a

firm improve competitive performance (Grant et al., 1994). Proponents of TQM argue that the philosophy can

be applied to any organization (Powell 1995).

The effectiveness of TQM as a system for organizational improvement has been widely reviewed in the

literature. TQM is an important management tool, which can offer business with stability, growth, and prosperity (Issac

et al., 2004). In order to achieve the requirement of quality, firms have to put the effort on the implementation of TQM.

Therefore, firms will introduce quality management practice to integrate internal information communications with

TQM philosophy effectively. In addition, the application of TQM mechanisms is also important to develop the

relationship between organizations and their suppliers. Moreover, the application of TQM can also increase the

satisfaction of the customer by providing preeminent products or services.

Evidence concerning the impact of TQM on business performance is based on a wide range of indicators that

differ across studies and are in some cases are contradictory, especially regarding financial performance, which

is measured in terms of ROA (return on assets), or ROI (return on investment).

There are many studies have investigated the link between TQM and organization performance, however, that

studies have concentrate on large organizations, and that could give a light on recognizing that TQM studies on

small and medium enterprises (SMEs) is limited (Parkin and Parkin 1996; Walley 2000). Therefore, this study

focuses on the impact of TQM components on SMEs financial performance in Jordan.

LITERATURE REVIEW:

Christos B. Fotopoulus&EvangelosL. Psomas(2009) and Kumar, Dixit Garg and T.K Grag (2009) studied the

impact of TQM practices on quality management consequences and explained the relationship between TQM

components including leadership, strategic quality planning, employee management and involvement, supplier

management, customer focus, process management, and other continuous improvements, and their effect on

quality management in the form profits, sales, and position.

Some research has found a positive effect of TQM (Easton and Jarrell, 1998; Hendricks and Singhal, 2001a,b);

whereas other research reports a negative incidence of TQM on all of the measures (Chapman et al. 1997).

Other research has found a neutral result (Adam, 1994; Powell, 1995; York and Miree, 2004). Hence, that

indicates the inconsistent results of those studies, However, that could lead to a methodological problem and

conceptual approaches used by researchers which may have led to conflicting results but, in response.

Moreno Luzon (1993) examined the effectiveness of TQM in a survey of 44 small manufacturing companies in

Valencia, Spain. Effectiveness was measured on the basis of managers’ satisfaction with the achievement of

specific objectives and their estimation of the change in several performance variables over a one year period

believed to be a consequence of the quality program. Overall, the managers indicated a high level of

achievement of their TQM objectives, and some managers perceived that their TQM programs had resulted in

highly positive effects. In particular, the most frequently cited effects were the development of a quality culture

(with 77% of firms experiencing this effect) and improved training (72.7%). Increased profits and increased sales were less frequently cited, with 63.6% and 50% of firms experiencing these effects, respectively.

Walley (2000) provided insights to the effect of TQM in SMEs in the UK farming sector. Respondents were

asked to rate the impact of TQM on a range of criteria. Based on the responses of 25 farmers who had

implemented TQM (15.2% of the sample), Walley (2000) concluded that although some farmers had indicated

that TQM had resulted in slight decreases in criteria such as ‘cost efficiency’ and “profitability”, on average

TQM appeared to have a small positive effect on overall performance. Criteria where TQM had a major impact

were “quality awareness” and “employee morale”.

Rahman (2001) studied the relationship between TQM practices and three business outcomes in SMEs in

Western Australia. He developed a questionnaire which asked respondents to rate themselves on the degree to

which they practiced 36 TQM mechanisms. The questions pertained to the similar six quality criteria that have

been examined in Anderson and Sohal’s (1999) study. Business outcomes were defined in terms of revenue,

profit, and the number of customers. A self rating scale was used to measure business outcomes. The

questionnaire was sent to 250 SMEs, and 49 usable responses were received. Rahman (2001) documented that

“leadership”, “processes, products and services”, “people”, and “customer focus” were significantly correlated

with revenue, profit, and the number of customers.



EsinSadikoglw ,CemalZehir (2010) and Alessandro Brun (2010) investigated the relationship between TQM

practices with innovation and employee performance. The theoretical model developed for the study explains

how different TQM practices i.e. leadership, training, employee management, information and analysis, supplier

management, process management, customer focus, and continuous improvements effects on employee

performance which leads to innovation performance and this in later stages effects the firm overall performance. Some researchers have found a positive effect of TQM (Easton and Jarrell, 1998; Hendricks and Singhal,

2001a,b); whereas other researchers found a negative incidence of TQM on all of the measures (Chapman et al.

1997). Other researchers also have found a neutral result (Adam, 1994; Powell, 1995; York and Miree, 2004).

Hence, that indicates the inconsistent results of those studies, However, that could lead to a methodological

problem and conceptual approaches used by researchers which may have led to conflicting results but, in

response.

INDEPENDENT VARIABLES:

TQM measurement:

The TQM program components used in the study include the following:

1. Commitment to Quality: It is important in implementing a TQM program to getthe commitment to the

program of top management and the company’s keystakeholders.

2. Employee Involvement: The qualitymanagement efforts of the organizationshould be fully supported by

the members of the organization, especially the rank and file employees and middle management. Top

management should be involved in planning, designing, implementing and monitoring the program.

3. Customer Focus: The ultimate objective of TQM is to satisfy and delight the customers. It is important,

therefore, to implement strategies to determine customer needs and requirements, to monitor their level

of customer satisfaction, and to respond to their concerns.

4. Fact-based Management: Employees need to be educated on the use of quantitative and statistical

techniques to monitor and improve the quality of products and processes.

5. Process Monitoring and Control: The effectiveness of the firm’s process strategies and quality

management program should be regularly monitored to ensure that targeted quality performance

outcomes are met.

6. Incentive and Recognition System: Since quality management programs will promote teamwork and

process-based approaches, appropriate incentives and recognition systems need to be designed to

continuously motivate employees to support the program.

7. Continuous Improvement: The quest for quality should be continuing. Employees need to be

encouraged to adopt productivity improvement programs.

TABLE 1 SHOWS THE ITEMS OF TQM STRATEGIES ASSOCIATED WITH THESE SEVEN TQM FACTORS:

TABLE 1 VALIDATED TQM PROGRAM COMPONENTS:

FACTOR ITEMS

Commitment to Quality

1. Primary consideration of quality in product design

2. Getting feedback from technical experts

3. Inclusion of customer feedback

4. Multi-functional review of product / service design

5. Ensuring benchmarking activities result to improvement

Employee Involvement

1. Organization of regular meetings

2. Encouragement of employees

3. Clarity and formality in goals

4. Top management involvement in planning &

implementing quality management programs

5. Presence of multi-functional teams

6. Presence of quality circles

Customer Focus

1. Program to implement customer service

2. Top management involvement in planning quality

3. Integration of training lessons to work processes

4. Inclusion of customer feedback

5. Techniques to determine customer satisfaction

6. Provision of financial support by top management



Fact-based

Management

1. Utilization of quantitative techniques in process

2. Utilization of quantitative techniques in production design

3. Training on problem-solving techniques

4. Training on quality control

Process Monitoring and

Control

1. Adoption of repair and preventive maintenance

2. Employee compliance to regulations

3. Periodic quality audits

4. Review of departmental targets

5. Quality as primary consideration in supplier Selection

Incentive and

Recognition System

1. Application for ISO 9000 certification

2. Company application for recognition

3. Incentives to employees

4. Involvement in quality management association

Continuous

Improvement

Orientation

1. System on item segregation

2. Signboards and labels

3. Records management system

4. Cleanliness

5. Programs on waste elimination

Source: Talavera, G. V. (2004), “TQM Constructs Development and Validation: The Philippine Experience,” GadjaMada

International Journal of Business, 6(3), pp. 355 - 381.

DEPENDANT VARIABLE:

Financial performance measurement:

FACTOR ITEMS

Financial performance

Return on investment

Earnings growth

Sales growth

Market share

Return on assets

Cash flow

The review of the literature on the status of TQM components and organizations’ performance return has been

analyzed in order to see the TQM components and its effect on organizations’ performance. The analyses are

carried out by applying several factors which provide a sufficient understanding of the context within which the

issue studied and analyzed. The discussion provides an important framework for this study in term of the

variables that are going to be used in term of measuring TQM. Therefore, the variables that will be used to

measure market sentiment are undertaken by Talavera, G. V. (2004). Figure 1 illustrates the conceptual

framework of this study.

FIGURE 1: CONCEPTUAL FRAMEWORK

Commitment to Quality

Process Monitoring and Control

Continuous Improvement Orientation

Employee Involvement

Customer Focus

Fact-based Management

Incentive and Recognition System

Financial performance



CONCLUSION:

Total Quality Management (TQM) is an approach that seeks to improve quality and performance which will

meet or exceed customer expectations. This can be achieved by integrating all quality-related functions and

processes throughout the company. TQM utilizes techniques that improve as well as get better product quality

and processes and thereby help a firm improve competitive performance. The quality management systems

force company departments to work as a team. Different areas of the company become reliant upon one another

to produce a quality product that meets and exceeds the customers' expectations. A quality system incorporates

measures that affect sales, finance, operations, customer service and marketing. This study focuses on the

impact of TQM components on SMEs financial performance in Jordan. An extension of this study for future

research can be developed in term of finding other factors of measuring TQM. Interested parties can develop

model of TQM’s impact on publicly traded firms. Rather than focusing on small and medium enterprises

REFERENCES:

[1] Adam Jr., E.E. (1994). Alternative quality improvement practices and organizational performance.

Journal of Operations Management, Vol. 12 No.1, pp. 27-44.

[2] Alessandro Brun (2010). Critical success factors of six sigma implementation in Italian

companies.International Journal of Production Economics, pp 1-7.

[3] Chapman, R.L, Murray, P.C and Mellor, R (1997). Strategic quality management and financial performance

indicators, International Journal of Quality & Reliability Management, Vol. 14 No. 4, pp. 432-448.

[4] Christos B Fotopoulus and EvangelosL.Posmas (2009). The impact of soft & hard TQM elements

onquality management results.International Journal of Quality and Reliability Management, Vol 26, no

2,pp 150-163.

[5] Crosby, P.B. (1979). Quality is free: The Art Of Making Quality Certain. New American Library, New York.

[6] Deming, W.E. (1986). Out of the Crisis. MIT Center for Advanced Engineering.Cambridge University Press.

[7] Easton, G. S. and S. Jarrell (1998). The Effects of Total Quality Management on Corpora Performance: An Empirical Investigation, The Journal of Business, 71(2), pp. 253-307.

[8] EsinSadikoglu ,CemalZehir (2010). Investigating the effect of innovation and employee performance

on relationship between TQM practices and firm performance: An empirical study of Turkish firms,

International Journal of Production Economics, pp 1-14.

[9] Grant, R. M., R. Shani, and R. Krishnan (1994). TQM’s Challenge to Management Theory and

[10] Practice, Sloan Management Review, pp. 25-35.

[11] Hendricks, K.B. and Singhal, V.R. (2001a). Firm characteristics, total quality management, and

financial performance, Journal of Operations Management , Vol. 19 No. 3, pp. 269–285.

[12] Hendricks, K.B. and Singhal, V.R. (2001b). The long-run stock price performance of firms with

effective TQM programs, Management Science, Vol. 47 No. 3, pp. 359–368.

[13] Issac, G. &Rajendran, C., Anantharaman, R.N (2004). A conceptual framework for total quality

management in software organizations, Total Quality Management, 15(3), 307-344.

[14] Juran, J. (1986). The quality trilogy, Quality Progress, No. 9, pp. 19-24.

[15] Kumar, Dixit Garg and T.K Grag. (2009). Total quality management in Indian industries:

relevance,analysis and directions. The TQM Journal, Vol 21, no 6, pp 607-622.

[16] Powell, T. C. (1995). Total Quality Management as Competitive Advantage: A Review andEmpirical

Study, Strategic Management Journal, 16(1), pp. 15-37.

[17] Parkin, M. A. and R. Parkin (1996). The Impact of TQM in UK SMEs, Industrial Management &

DataSystems, 96(4), pp.6-10.

[18] Rahman, S.-U. (2001). Total Quality Management Practices and Business Outcome: Evidence FromSmall

and Medium Enterprises in Western Australia, Total Quality Management, 12(2), pp.201-210.

[19] Rao, A., L. Carr, I. Dambolena, R. Kopp, J. Martin, F. Rafii, and P. Schlesinger (1996). Total

[20] Quality Management: A Cross-Functional Perspective, John Wiley & Sons, Inc.

[21] Talavera, G. V. (2004). TQM Constructs Development and Validation: The Philippine Experience,

GadjaMada International Journal of Business, 6(3), pp. 355 - 381.

[22] Walley, K. (2000). TQM in Non-Manufacturing SMEs: Evidence From the UK Farming

Sector,International Small Business Journal, 18(4), pp.46-61.

[23] York, K.M. and Miree, C.E. (2004). Causation or covariation: an empirical re-examination of the

linkbetween TQM and financial performance, Journal of Operations Management, Vol. 22, pp. 291311.

----



TOURISM POTENTIALS IN BAGLAN TASHIL

Dr. Subhash Nikam,

Research Guide & Principal

S.P.H.College, Malegaon, Nasik-india

Dr. Deepak Thakre,

Asst. Prof. in Geography,

L.V.H.College, Panchavati, Nasik-India

ABSTRACT

Tourism is travel for recreational, leisure or business purposes. The World Tourism

Organization defines tourists as people "travelling to and staying in places outside their usual

environment for not more than one consecutive year for leisure, business and other purposes".

Tourism has become a popular global leisure activity.

The climatic conditions are very healthy and pleasant in the study area. Temperature

remains much lower than the remaining part of Baglan tahsil. Temperature increases from about

the latter half of February up to May Temperature starts decreasing from the month of June still

August. Rainfall mainly receives in the month June to Sept. from the monsoon. The study area has tremendous potential for the ecotourism and Religious tourism

development but the rural tribal community is not aware about the ecotourism. Villagers are in

there traditional functioning. Cattle and Goat grazing is considered as an economical activity

which does not have any scope due to protected forest. So the economical condition of peoples is

not changing. If the government agencies as ITDC and MTDC, forest department will promote

and propagate such area for selling as tourists destination, which will attract people all around the

world and number of tourist will definitely increase. To promote this side for tourism well planed

infrastructure should be created. Construction of good hotels and restaurants is necessary so as

homely cottages with local impact in food and building material should be consider. Boost in

number of tourist will provide the job opportunities which will be beneficial to increase the

economic condition of local tribal community.

Keyword: Ecotourism, ectourists, ecotourism development, flora and fauna, tribal community,

Culture, environmental conservation.



INTRODUCTION:

Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists

as people "travelling to and staying in places outside their usual environment for not more than one consecutive

year for leisure, business and other purposes". Tourism has become a popular global leisure activity. In 2010,

there were over 940 million international tourist arrivals, with a growth of 6.6% as compared to 2009.

Ecotourism can be defined as travel to natural attractions that contributes to their conservation, respects

integrity of local communities and enhances the tourist’s understanding of natural attraction, its conservation

and the local community. It contributes to the welfare of local and indigenous population.

The concept of modern tourism is relatively new. The main characteristics of modern tourism were obvious in

the changes in mental attitudes towards pleasure seeking, to find relief from daily routine and the city dweller’s

yearning for physical adventure and pleasure. Scenic attractions are a very important factor in tourism, scenery

of the landscape consisting of mountains, rivers, water falls, lakes, man made water reservoirs, glaciers, wide

life, forests, deserts are the strong forces attracting people to visit them. Hence, it gives birth to a new concept a

new concept of tourism called as “ecotourism”. Ecotourism has been relatively new around since the nineteenth

century, it has grown considerably in popularity and commercial importance in just the past ten years in

response to interest in the environment and adventure, increase in leisure time and personal incomes and most

important is accessibility to many natural attractions. Ecotourism is primarily an activity to enjoy natural beauty

and authentic culture.

REVIEW OF LITERATURE:

In the national as well as in the international level many case studies related to the eco-tourism and community

based eco-tourism are published. One research titled “Developing a Sustainable Eco-Tourism Framework for

the Cordillera Region of the Philippines” by Arthur Joseph Paul D. Alipio clearly mentioned the impact of

Natural resources, pollution and physical impacts on Ecotourism. In his project he described the socio-cultural

impacts of tourism activities also economic impacts of tourism. One of the research paper was published by

“Centre for East-West Cultural and Economic Studies”, Bond University (2005) on the “Development of eco-

tourism in tribal regions of Orissa: Potential and recommendations” which was written by NilakanthaPanigrahi,

NKC Centre for Development Studies, Orissa, India. In the particular research paper it is explained very clearly

the treasure of tourism and the tourist potential in the State of Orissa. One of the case studies was published in

the, “The Hindu,” (2006) magazine on the “Periyar tiger reserve and community participation”, which was

written by prominent ecologist Ashish Kothari and NeenaPathak. In the particular article it is explained very

well how once the local people of the forested area were involved in stealing of wood and poaching activities

and how the local people after being involved in the ecotourism activities as a part of Global Environmental

Facility (GEF) funded Eco-development Project helped to control over the cases of poaching and how they

were later benefited from the project. Another article was published by the same author Mr. Asish Kothari in,

“The Hindu”, magazine (2007) on the topic- “Tourism, wildlife and communities”, explains how the successful

ecotourism ventures are facing threat due to unclear policies. Two successful ecotourism destinations from

Uttarakhand and one from the Rajasthan were discussed here. Another case study published in, “The Hindu”,

magazine (2007), titled, “Andaman and Nicobar Islands – dangerous tourism” explains how the unplanned

tourism can cause great threat to the biodiversity hotspots and other natural environments. One case study

published in “Current Science”, Volume – 95 No. 11 (Dt. 10th

Dec, 2008), titled, “Ecotourism in wetlands causes loss of biodiversity” by S. Sandilyan, K. Thiyagesan and R. Nagarajan – explains that wetlands

might be adversely affected by ecotourism.

ECOTOURISTS:

It is very difficult to determine who exactly the “Ecotourists” are the successful ecotourism will depend on

‘good’ tourist behaviour. Ecotourism has emerged from western environmentalism, therefore mostly related to

the demand of western travellers who are generally educated and interested in culture and environment.

Ecotourists can appreciate the surrounding nature while at the same time learn about unique culture of the local

people.

OBJECTIVES:

The study is aimed at investigating the following objectives in the study area:

� To assess the natural and cultural resource potential for development of ecotourism.

� To examine the village wise land use pattern of study area.

� To find out the recent trend of tourism development in the study area.



METHODOLOGY:

Physical survey of 23 villages, having very rich flora and fauna was conducted for ecotourism development.

The secondary data is used for a closer look into the culture and tradition in the study area. Discussions and

interviews were also organized with the forest officers, tourists and local tribal people with an aim to create

awareness about ecotourism development collected from the forest department, Irrigation department and Trust

of Mangi-Tungi Jain Temple of Bhiwad, Attempts have been made to analyse the resource pot entities for

ecotourism development which is useful for the economic development of rural tribal developing community.

STUDY AREA:

The study area lies between 20042’ to 20

053’ North latitude and 73

045’ to 74.07’ East longitude having an area

of 26714.63 hectares with the population of 32,808 including 80.7% tribal population (1991) of 23 villages

selected for the study, which are situated in the north-western part of Baglan tehsil in Nashik district of

Maharashtra.

The study area has tremendous potential for ecotourism development which is very useful for economic

development of local tribal community.

CRITERIA FOR THE ASSESSMENT OF RESOURCE POTENTIALS FOR ECOTOURISM:

Ecotourism is based on natural bio-physical attributes, while conservation of natural resources is fundamental to

ecotourism. Tourists visit places of natural beauty and culture for leisure, adventure and study. While assessing

potential of ecotourism sites, the following factors are considered:

� Attractiveness of natural features

� Richness in wild life

� Flora diversity

� Water resources � Cultural and historical uniqueness

� Accessibility

� Local infrastructure

ATTRACTIVENESS OF PHYSICAL FEATURES:

Mountains and hills carry great aesthetic appeal than the lower relief. The study area is situated in the Eastern

side of Sahaydri mountain range. Few highest points like Mangi(1326Mt) Tungi(1323Mt) are the main

attractions of this area. Salbari pass provides road connection from the historical time. River Mousam

originating from Western Ghats adds charm in to this scenic location

Few historical forts like Salher(1613mt), Hargad(1122mt),Auranggad (1129mt) Mulher, through apportinuty to

historical lovers. Salher ( 1613Mt) is the second highest peak in the Western Ghat.

CLIMATE:

The climatic conditions are very healthy and pleasant in the study area. Temperature remains much lower than

the remaining part of Baglan tahsil. Temperature increases from about the latter half of February up to May.

May is the hottest month with mean daily max. Temperature 37.4o

c. Temperature starts decreasing from the

month of June still August. December is the coldest month with the mean daily min. temperature at 11.2oC.

Annual Max temp is 32o

C and min is 17.8oC. Rainfall mainly receives in the month June to Sept. from the

monsoon.

FORESTS AND WILD LIFE:

The study area has occupied the area of 13462 hectares of forest. The region has natural cover of vegetation.

The floral wealth of study area is great in terms of variety. The forests in this area are of dry deciduous type, In

this forest teak is the main species, other closely associated species are Sadada or Ain, Hed, Kalam, Sisum,

Khair, Tiwas, Bibla & Dhavda in varying proportions. Bamboos are also common in western part. The

vegetation is generally found along terraces and sheltered belt. The major portion of the study area of forest has

been occupied by ‘Reserved’ forest.

The study area has an abundance of wild life, A number of species are found including insects, mollusks,

mammals, birds, reptiles, amphibian and fishes. The tiger ‘Wagh’ (Felis Tigris) is common in the study area.



The panther ‘bibtya’ (Felis parades), Wolf (Canis pallipes), Fox, Monkeys, Mongoose and Jackals are

commonly found in the study area. The Baglan panthers are especially large in size, many of them over seven

feet in length.

Apart form these, the Stag Samber (Rusa aristotelis) the spotted deer, chital (Axis maculates), Nilgay

(Portax pictus) wild boar ‘dukkar’ (Sus indicus) the barking deer (Cervulus aurcus) are found in small number.

WATER RESOURCES:

Water bodies constitute major resources for ecotourism promotion. Lakes, tanks, dams etc can play a vital role

in the aesthetic and recreational activities of the people. Water sports like swimming, boating, river rafting and

other related activities can be developed in study area.

The headwaters of the Mousam river rise from the Sahyadris south of the Hanuman hill of Salher fort. The river

runs eastwards past Mulher. It is joined by large number of affluent from the northern side as well as southern

slopes of the Galana hills. The important among them are Tungadi nala, Kanjari nala, Dagadchand nala, etc. The

Mousam has cut a wide valley.

There are number of water falls in the north-west and south-west part of study area. Lakes are a natural choice for ecotourism activities. There is major water project constructed on the Mousam River in 1982 at Ambapur

known as Haranbari

CULTURAL AND HISTORICAL UNIQUENESS:

People themselves are major source of tourist attraction. The total tribal population is 80.7% This study area as a cultural landscape of the region carries an unmistakable imprint of its history since the time of the cession of

the region to the Muslim rule of Khans right through the Maratha occupation till the advent of the British. Being

unique in their culture and tradition the people of this region still retain some of their basic cultural values. The

transition between the territory of Delhi rulers and the kingdoms of the south, was a scene of encampment of

armies, a theatre of conflict between the rival Maratha dynasties in the 18th

and early 19th

century and offered

easy access or escape routes to the Arabian sea ports through the Selbari Pass. The Salher fort and the Mulher

fort are the evidence of the uniqueness and historical importance of this area.

The people speak languages like Bhili, Kokani and Ahirani, The former is enumerated as the mother-tongue of

tribal people of the area and the latter is classed as a dialect of Marathi, though there is a controversy about the

origin and status of Ahirani as some consider it an admixture of Gujrati, Prakrit, Hindi and Marathi, once the

language of Abhir dynasty.

The people of the region are straight forward, simple, hard working and love their motherland. The culture and

art of this tribal community have significant potential for tourism development. They have a distinctive way of

building their houses on the foothills of mountains. In addition their traditional dances, music, weeding

ceremonies, their fairs and festivals are unique examples of culture. Three day celebration once in a year takes

place on the day of Anant Chaturdashi by performing Ramlila known as ‘Bhawada’ local language. This

tradition is going on from last 300years at Mulher.

These people prepare wine from ‘Moha’ Flowers for domestic use only. They workship various Hindu Gods as

Lord Shiva, Ganesha, goddess Ambika etc.

RECENT TREND IN TOURISM DEVELOPMENT:

There has been a considerable increase in tourist arrivals (only domestic)in this region. Religious motivation

plays an important role in pilgrimage tourism in study area. Mangi-Tungi is an important holy place of the Jains.

There are seven caves on the hill top in which there are sculptures of Jain deities. More than two lakh peoples

visit this holly place each year. There is another important holly place, known as “Dawal Malik Darga”, located

near Antapur. It is a symbol of national integration both Hindu and Muslims worship these god, more than 300

peoples from entire part of Maharashtra visit this place every week.

Apart from these holy places, many trekkers, excursionists, nature lovers, students are visit this area. As per the

information collected from local people, nearly 20 to 50 tourists are visiting this place in a day. Varies places

like Salher fort, Haranbari Project, Mangi-Tungi Temples, Antapur etc are there places of interest. This areas are

not properly advertised so number of tourist is less as compare to the areas having less potentials than Mulhar. If

the government agencies like ITDC and MTDC, forest department will promote and propagate this area for as a

tourists destination, which will help to increase the number of tourist arrival. Which will help to increase the

economic condition of local tribal community?

LAND USE:

In the study area, 50.39% area is under forest only 34.72% land is used for cultivation out of which only 2.22%

land comes under irrigation through wells and cannels. Subsistence farming is practice here. Animal grazing is



also practice in small scale but this is not permitted in the protected forest area. So the people are not

economically developed. If ecotourism is properly propagated and advertise which increase the number of

tourist which will provide job and business opportunities to local people.

INFRASTRUCTURE:

This area is well connected with Nasik and neighboring Gujarat state by tar road In the study area every village

is connected by tar road. State highway No. 16 is an important road along with Mousam river passes east to

west which provides accessibility to the tribal people. M.S.R.T.C buses run frequently in the study area, private

jeeps also provide transportation.

The accommodation facilities are not fully developed there is lack of good hotels and restaurants.

Accommodation is provided by Trust of Mangi-Tungi Temple trust nearly 100 rooms are there at Bhilwad. Primary health centers are located at Mulher, Antapur, Salher which provide medical facilities for rural

population. CONCLUSION:

The study area has tremendous potential for the ecotourism and Religious tourism development but the rural

tribal community is not aware about the ecotourism. Villagers are in there traditional functioning. Cattle and

Goat grazing is considered as an economical activity which does not have any scope due to protected forest. So

the economical condition of peoples is not changing. If the government agencies as ITDC and MTDC, forest

department will promote and propagate such area for selling as tourists destination, which will attract people all

around the world and number of tourist will definitely increase. To promote this side for tourism well planed infrastructure should be created. Construction of good hotels and restaurants is necessary so as homely cottages

with local impact in food and building material should be consider. Boost in number of tourist will provide the

job opportunities which will be beneficial to increase the economic condition of local tribal community.

REFERENCES:

[1] Lisa M. Campbell, 1999, “Ecotourism in rural developing communities”, Annals of Tourism Research,

Vol.26, No.3. P534-53.

[2] Gearing, Charles, E, Swart, William and Var, Turgut (1974) “Establishing a measure of touristic

attractions”, Journal of Travel Research, Vol. 12, No.4

[3] Ferrario, F.F. (1979), “The evolution of tourist resources” an applied methodology”, Journal of Travel

Research, Vo. XVII No.3.

[4] Dixit, K.R. (1986) “Maharashtra in Maps”, Maharashtra State Bored for literature and culture

Mantralaya, Bombay – P-183

[5] Sinha P.C (1998) “Ecotourism and Mass Tourism”, Anmol publication Pvt. Ltd. New Delhi. P. 29-30

[6] Parbati Nandi and P. Chakraborty (1999), “Tourism and Environmental Degradation Facts and

Remedies”, Geographical Review of India. Vol-61, No. 1 P. 22-27.

[7] Glen T. Hvengard and Philp Dearden (1998), Linking ecotourism and Biodirvsity conservation: A case

study of Doi Inthanon National Park, Thailand”. Singapur Journal of Tropical Geography. Vol-19 No.2

[8] Pleumaram, A. (1997), “Open questions concerning the concept, policies and practicals of ecotourism”.

RECOFTC Report No. 15, Bangkok, Thailand P.25.

[9] Govt. of India (1994): Gazetteer of Bombay Presidency, Nashik, Vol.XVI

[10] District Census Handbook (1995), “Census of India 1991. Series -14. P.178-179.

[11] Rai, H.C. (1998), “Hill tourism, Planning and Development”, Kaniska Publishers, New Delhi. P.12-23.

[12] Punia B.K. (1994), “Tourism Management: Problems and Prospects”, Ashish publishing House, New

Delhi. P.33-37

POPULATION & LAND-USE PATTERN IN THE STUDY AREA:

Village

Po

pu

latio

n

To

t area

in

hecta

res

Area

un

der

forests (%

)

Irrigat-ed

La

nd

(%)

No

n irrig

a- ted

lan

d(%

)

Cu

ltura

l waste

lan

d (%

)

Area

n

ot

av

aila

ble

for

cultiv

atio

n (%

)

Golwad 2396 3407.00 68.71 2.35 24.80 1.61 2.52

Mohalangi 1052 502.00 61.35 1.20 32.27 1.59 3.59

Borhate 499 652.00 66.10 0.77 16.87 1.53 14.72



Jaitpur 721 248.00 48.79 4.84 18.55 23.79 4.03

Maliwade 1314 773.00 44.11 0.65 47.99 1.68 5.56 Devthan-dongar 406 343.00 0.00 30.61 40.52 8.16 20.70

Shevare 842 1387.00 29.27 1.44 53.86 2.81 12.62

Vade-digar 707 132.00 0.00 15.15 66.67 9.85 8.33

Hatnoor 288 216.00 0.00 1.39 26.85 58.80 12.96

Kharad 470 138.00 0.00 3.62 47.10 36.96 12.32

Jad 1539 1827.00 78.49 1.92 7.61 9.63 2.35

Babhulane 1172 1358.00 82.33 2.95 11.86 1.69 1.18

Aliyabad 1671 1886.00 3.82 1.64 22.96 19.72 51.86

Ajande 327 290.00 31.38 0.56 61.72 2.07 4.27

Jamoti 1582 1001.00 57.94 2.50 31.17 1.80 6.59

Mulher 3356 935.00 64.49 1.71 23.64 4.92 5.24

Bordaiwat 1502 1177.00 71.88 0.00 24.47 0.85 2.80

Bhimkhet 1001 959.00 56.20 1.43 36.08 0.00 6.28

Waghambe 982 877.00 26.68 0.09 55.64 0.91 16.67

Mannur 2243 2950.00 51.86 0.68 28.81 16.95 1.69

Salher 2228 2400.00 33.17 0.83 58.33 2.04 5.63

Bhilwad 1548 1817.63 73.48 0.31 21.66 0.34 4.22

Antapur 4962 1439.00 23.35 8.55 58.44 1.11 8.55

Total 32808 26714.63 50.39 2.22 32.50 6.11 8.77

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GLOBAL STOCK MARKET INTEGRATION - A STUDY OF SELECT

WORLD MAJOR STOCK MARKETS

P. Srikanth,

M.Com., M.Phil., ICWA.,

PGDT.,PGDIBO.,NCMP., (Ph.D.) Assistant Professor,

Commerce Post Graduate College, Constituent College of Osmania

University, Secunderabad. A.P.

Dr. K. Aparna,

M.Com, MBA., Ph.D., UGC-NET,

Assistant Professor, Business Management,

Telangana University Dichpally, Nizamabad, A.P.

ABSTRACT

The present study is being contemplated with the objective of studying the degree of

stock market integration. In this study, month-wise average prices of BSE-Sensex, NYSE,

NASDAQ, S&P500, HangSeng, Nikkei225, SSE Composite index and FTSE100 have been

selected. Multiple Correlations has been computed for the select stock market indices. Statistical

Significance of the correlation has been tested by applying correlation t-test. The results of these

studies support the view that there is a substantial integration between domestic and international

financial markets. BSE-Sensex has witnessed greater fluctuations which has been indicated by

very high Ce-efficient of variation compared to other select indices. Sensex, the Indian bench

market index, has shown strong association with NYSE and Hang Seng. Chinese stock index i.e.,

SSE Composite index has exhibited strong correlation with BSE- Sensex and with Hang Seng.

Japanese stock index i.e., Nikkei225 has strong correlation with all the select indices except

Sensex, HangSeng and SSE Composite index. The European index i.e., FTSE100 has exhibited

strong correlation with all the US stock market indices and with Nekkei225, the Japanese stock

market index.

Keywords: Stock market integration, Global stock markets.



1. INTRODUCTION:

The globalization of the world stock markets is the most significant development that has occurred during the

last decade. Various factors contributed to this including: the advancement of technology and remote access

which have been utilized in security trading, the emergence of new international financial institutions offering

financial services regardless of geographical jurisdictions, trends of liberalization and the removal of

restrictions used to be imposed on foreign ownership, and the movement towards regional integration of that

stock exchanges, clearing and settlements organizations, and other financial institutions. Along with various

measures, opening up of the home market for the foreign investors is one of the important steps taken by the Indian Government that may lead the Indian stock market to be strongly integrated with the stock market of the

rest of the world. The globalization phenomenon may be blessing, since many experts believe that globalization

may improve market efficiency, lower its risk due to the possibility of diversification, and use arbitrage in a

relevant way. On the other hand, it may increase pricing volatility and trading instability, due to the high

correlation between leading - major- stock markets and other markets as well as to the fact that the irrational

trading in one market may move to other markets as witnessed in the last two decades..

2. LITERATURE REVIEW:

William L. Huth et al have opined that economic interdependence between nations has been the focus of

considerable research. In their view point, a particular avenue of international interrelationship that has received

a great deal of recent attention is the integration of international stock markets. Increased trade between nations

implies that domestic corporate profitability will be influenced by economic conditions in other countries. If

international influence is widespread between particular markets then it is likely that measures of overall market

performance will be related1. Hazem A. Marashdeh et al examine the extent of stock market integration among

the Gulf Cooperation Council (GCC) countries. The results of the empirical tests suggest that the GCC stock markets are not fully integrated and there still exist arbitrage opportunities between some of the markets in the

region. On the other hand, the results show no evidence of cointegration between the GCC stock markets and

developed markets, which implies that international investors can diversify their portfolio and obtain long-run

gains by investing in the GCC markets2. Lucía Cuadro Sáez et al analyse whether, and to what extent,

emerging market economies (EMEs) have systemic importance for global financial markets, above and beyond

their influence during crises episodes. Using a novel database of exogenous economic and political shocks for

14 systematically relevant EMEs, they find that EME shocks not only have a statistically but also economically

significant impact on global equity markets. The economic significance of EME shocks is in particular

underlined by their remarkably persistent effects over time3. Ravazzolo et al examine real and financial links

simultaneously at the regional and global level for a group of Pacific-Basin countries by analysing the

covariance of excess returns on national stock markets over the period 1980-1998. They find overwhelming

evidence at the regional and global level and for all sub-periods that financial integration is accompanied by

economic integration. This seems to suggest that economic integration provides a channel for financial

integration, which explains, at least partly, the high degree of financial integration found in this study and in

other studies for this region even in the presence of foreign exchange controls4.

3. IMPORTANCE OF THE STUDY:

In the context of increasing globalizing and increasing opportunities to the investors to invest abroad, it is

essential for the international portfolio investors from India to understand the level of interdependence among

the major stock markets in the world and its impact on Indian stock market. Study of level of correlation between Indian stock market and other major stock markets, helps the investors in planning for international

price arbitrage and international portfolio diversification. It is also essential to analyse the level of correlation

among the major stock markets themselves. In order to reduce the portfolio risk, an investor will prefer to invest

in the stock markets which are less correlated with other stock markets. The present study helps in better

international portfolio diversification and making effective planning for international price arbitrage.

4. OBJECTIVES OF THE STUDY:

The objective of the present study is to analysis the level of integration of Indian stock market with major stock

markets in the world.

5. METHODOLOGY OF THE STUDY:

6. 5.1. Period of study:

The study covers a period of 10 years from January 2000 to December 2009.



5.2. Sources of Data:

The present study is based on secondary data. Month-wise average prices of select indices have been collected

from concerned stock exchange websites. Apart from this, various journals, magazines, text books and articles

have been referred to get the relevant information.

S.No. Index selected for the

study Country Sl.No.

Index selected for the study

Country

1 Sensex India 6 HangSeng Hong Kong

2 Dow Jones Industrial

Average

United States

of America 7 SSE Composite index

People’s Republic

of China

3 NYSE United States

of America 8 Nikkei225 Japan

4 NASDAQ United States

of America 9 FTSE100 United Kingdom

5 S&P500 United States

of America

6.3. FRAMEWORK OF ANALYSIS:

For the present study, month-wise average index prices have been chosen. Multiple Correlation has been

computed for the select stock market indices. Statistical Significance of the correlation has been tested by

applying correlation t-test. Correlation has been divided into three levels. Correlation below 0.40 is treated as

Weak; correlation between 0.40 to 0.70 as moderate; and correlation between 0.70 to 1 as strong. Descriptive

statistics i.e., Minimum, Maximum, Mean, Standard Deviation, Coefficient of Variation, Skewness and Kurtosis have been computed for the select indices.

7. DESCRIPTIVE STATISTICS FOR THE SELECT INDICES FOR THE PERIOD FROM 1-1- 2000

TO 31-12-2009:

TABLE 1 : DESCRIPTIVE STATISTICS

Indices N Minimum Maximum Mean Std.

Deviation

Coefficient

of Variation

Skewness Kurtosis

SENSEX 120 2811.60 20286.99 8,374.54 5,049.42 60.29% 0.659 -0.918

DOW 120 7062.93 13930.01 10,466.61 1,453.80 13.89% 0.242 0.002

NYSE 120 4617.03 10311.61 7,046.26 1,410.60 20.02% 0.483 -0.550

NASDAQ 120 1172.06 4696.69 2,185.92 654.76 29.95% 1.678 3.659

SP500 120 735.09 1549.38 1,186.39 197.41 16.64% -0.142 -0.812

HANGSENG 120 8634.45 31352.58 15,597.13 4,782.11 30.66% 0.909 0.501

SSE

Composite

index

120 1060.74 5954.77 2113.82 1032.67 48.85% 1.77 2.860

Nikkei225 120 7568.42 20337.32 12,682.00 3,162.20 24.93% 0.421 -.884

FTSE100 120 3567.40 6721.60 5,248.81 866.53 16.51% -.096 -1.222

As shown in table 1, BSE-Sensex has witnessed greater fluctuations which have been indicated by very high co-

efficient of variation followed by SSE composite index. In the case of US indices, NASDAQ has shown highest fluctuations and DOW has shown very low fluctuations. Skewness of the distribution of all the indices prices is

positive except S&P500 and FTSE100. European index FTSE100 has lesser fluctuations when compared US

indices. Kurtosis in the case of NASDAQ is positively very high followed by SSE Composite index indicating

abnormal peaks in the distribution of the indices prices.

8. STUDY OF RELATIONSHIP OF BSE-SENSEX WITH OTHER SELECT INDICES FROM 1-1-

2000 TO 31-12-2009:

To study the relationship between BSE-Sensex and other indices selected for the study, the following hypothesis



has been designed.

Null Hypothesis: There is no significant relationship between Sensex and other select indices.

Alternate Hypothesis: There is a significant relationship between Sensex and other select indices.

TABLE 2: CORRELATION BETWEEN BSE-SENSEX AND OTHER SELECT INDICES

Indices

Correlation T-test results

Correlation

Coefficient

Level of

Correlation

t-value ‘p’ value Hypothesis

accepted

Sensex & Dow 0.592 Moderate -4.361 0.001 H1: Accepted

Sensex & NYSE 0.741 Strong 2.775 0.006 H1: Accepted

Sensex & NASDAQ 0.164 Weak 13.314 0.001 H1: Accepted

Sensex & S&P500 0.386 Weak 15.582 0.001 H1: Accepted

Sensex & HangSeng 0.912 Strong -11.377 0.001 H1: Accepted

Sensex & Nikkei225 0.336 Weak -7.920 0.001 H1: Accepted

Sensex & FTSE100 0.410 Moderate 6.683 0.001 H1: Accepted

Sensex & SSE Composite index 0.764 Strong -13.307 0.001 H1: Accepted

The study of relationship between BSE-Sensex and other select indices (table 2) indicates that, null hypothesis

is rejected and alternate hypothesis is accepted in all the cases. Hence, there is a significant relationship between

Sensex and other world major indices. In all the cases, correlation is significant at 1% level of significance,

indicating strong integration of Indian stock market with major world stock markets. Though, the correlation of

Indian stock market is weak with NASDAQ and S&P500 of US market and also with Nikkei225 of Japanese

stock market, the relationship was statistically significant as it is revealed in t-test. As shown in table 2, highest

correlation was recorded between Sensex and Hang Seng and the lowest correlation was recorded between

Sensex and NASDAQ. From among the US stock market indices, NYSE exhibited strong positive correlation

with Sensex; Dow has showed moderate correlation. NASDAQ and S&P500 exhibited weak correlation with

Sensex. In the case of Asian regional stock markets, Hong Kong market (i.e., Hangseng) and Chinese stock

market (SSE Composite Index) showed strong integration with Indian stock market and Japanese stock market

(i.e., Nikkei225) exhibited weak correlation with Indian stock market. Moderate correlation between Sensex

and FTSE100 indicates that European Stock market is not very strongly integrated with Indian stock market.

9. STUDY OF RELATIONSHIP OF DOW JONES INDUSTRIAL AVERAGE (DJI) WITH OTHER

SELECT INDICES FROM 1-1-2000 TO 31-12-2009:

To study the relationship between Dow Jones Industrial average (DJI) and other indices selected for the study,

the following hypothesis has been designed.

Null Hypothesis: There is no significant relationship between Dow Jones Industrial average (DJI) and other

select indices.

Alternate Hypothesis: There is a significant relationship between Dow Jones Industrial average (DJI) and

other select indices.

TABLE 3: CORRELATION BETWEEN DOW JONES INDUSTRIAL AVERAGE (DJI) AND OTHER

SELECT INDICES

Indices Correlation Coefficient

Level of Correlation

T-test results


accepted

Dow & Sensex 0.592 Moderate 4.361 0.001 H1: Accepted

Dow & NYSE 0.960 Strong 18.497 0.001 H1: Accepted

Dow & NASDAQ 0.539 Moderate 56.892 0.001 H1: Accepted

Dow & S&P500 0.914 Strong 69.291 0.001 H1: Accepted

Dow & HangSeng 0.768 Strong -11.244 0.001 H1: Accepted

Dow & Nikkei225 0.785 Strong -6.973 0.001 H1: Accepted

Dow & FTSE100 0.833 Strong 33.772 0.001 H1: Accepted

Dow & SSE

Composite index 0.614 Moderate -51.311 0.001 H1: Accepted

In the case of all the above indices, alternate hypothesis is accepted, indicating statistically significant



relationship between Dow Jones industrial average (DJI) and other world major indices as observed from Table-

3. Dow, one of benchmark indices of US stock market, is exhibiting strong correlation with all other leading

indices in the world except Sensex, NASDAQ and SSE Composite index. Dow Jones industrial average (DJI),

the US stock index, is strongly correlated with other US indices (i.e., NYSE and S&P500) except NASDAQ.

DJI has moderate correlation with NASDAQ. There is a strong correlation between Dow and FTSE100 which indicates close integration of US and Europe stock markets. Dow has strong correlation with Hong Kong stock

market index (i.e., Hang Seng) and Japanese stock market index (i.e., Nikkei225) which indicates strong

integration with stock markets of Asia pacific region. However, Dow is showing moderate correlation with

BSE-Sensex and SSE Composite Index indicating moderate integration of Indian and Chinese stock markets

with US stock market.

10. STUDY OF RELATIONSHIP OF NYSE COMPOSITE INDEX (NYA) WITH OTHER SELECT

INDICES FROM 1-1-2000 TO 31-12-2009:

The following hypothesis has been designed to study the relationship between NYSE Composite index (NYA)

and other select indices.

Null Hypothesis: There is no significant relationship between NYSE and other select indices.

Alternate Hypothesis: There is a significant relationship between NYSE and other select indices.

TABLE 4: CORRELATION BETWEEN NYSE COMPOSITE INDEX (NYA) AND OTHER SELECT

INDICES

Indices

Correlation

Coefficient

Level of

Correlation

T-test result


accepted

NYSE & Sensex 0.741 Strong -2.775 0.006 H1: Accepted

NYSE & DOW 0.960 Strong -18.497 0.001 H1: Accepted

NYSE & NASDAQ 0.452 Moderate 34.236 0.001 H1: Accepted

NYSE & S&P500 0.847 Strong 45.068 0.001 H1: Accepted

NYSE & HangSeng 0.839 Strong -18.787 0.001 H1: Accepted

NYSE & Nikkei225 0.749 Strong -17.830 0.001 H1: Accepted

NYSE & FTSE100 0.789 Strong 11.894 0.001 H1: Accepted

NYSE & SSE Composite index 0.634 Moderate -30.907 0.001 H1: Accepted

The ‘p’ value is less than 0.05 in all the above cases. Hence, Null hypothesis is rejected and alternate hypothesis

is accepted. It can be inferred from the above analysis that, the relationship of NYSE with other world major

indices is statistically significant. NYSE, one of the bench mark indices of US, is exhibiting strong integration

with other major indices in the world except NASDAQ and SSE Composite index. As indicated in table 4,

NYSE, major US stock market index, is showing strong correlation with other US major indices i.e., DOW and

S&P500, except NASDAQ. Correlation between NYSE and BSE-Sensex is strong, indicating closer integration

between US and Indian stock markets. Relationship of NYSE with Hang Seng and Nikkei225 is also very

strong. It clearly indicates the strong integration of stock market of US and Asia-pacific region. However,

correlation between SSE Composite index and NYSE is moderate. NYSE is strongly correlated with FTSE100

indicating strong correlation of US and European stock markets.

11. STUDY OF RELATIONSHIP OF NASDAQ COMPOSITE INDEX WITH OTHER SELECT

INDICES FROM 1-1-2000 TO 31-12-2009: To study the relationship between NASDAQ Composite index and other indices selected for the study, the

following hypothesis has been designed.

Null Hypothesis: There is no significant relationship between NASDAQ and other select indices. Alternate Hypothesis: There is a significant relationship between NASDAQ and other select indices.

TABLE 5: CORRELATION BETWEEN NASDAQ COMPOSITE INDEX AND OTHER SELECT

INDICES

Indices Correlation

Coefficient

Level of

Correlation

T-test result


accepted

NASDAQ & Sensex 0.164 Weak -2.775 0.006 H1: Accepted



NASDAQ & DOW 0.539 Moderate -18.497 0.001 H1: Accepted

NASDAQ & NYSE 0.452 Moderate 34.236 0.001 H1: Accepted

NASDAQ & S&P500 0.792 Strong 45.068 0.001 H1: Accepted

NASDAQ & HangSeng 0.466 Moderate -18.787 0.001 H1: Accepted

NASDAQ & Nikkei225 0.802 Strong -17.830 0.001 H1: Accepted

NASDAQ & FTSE100 0.771 Strong 11.894 0.001 H1: Accepted

NADAQ & SSE

Composite index 0.245 Weak -0.646 0.519 H0: Accepted

Statistically significant relationship between NASDAQ and other world major indices is observed by accepting

alternate hypothesis at 95 percent level of confidence, except with SSE Composite Index . As revealed from

table 5, impact of NASDAQ is not similar on all the indices selected for the study. In America region,

NASDAQ has exhibited strong correlation with S&P 500 and it has moderate correlation with other major US

indices i.e., DOW and NYSE. Influence of NASDAQ on select Asia-pacific indices is not on same level. It has

showed strong correlation with Japanese stock market (i.e., Nikkei225) and moderate correlation with Hong

Kong stock market (i.e., Hang Seng) and weak correlation with Indian stock market (i.e., BSE-Sensex) and

Chinese stock market (i.e., SSE Composite index). The correlation between NASDAQ and FTSE100 is strong which indicates closer integration of US stock market with European stock markets.

12. STUDY OF RELATIONSHIP OF S&P 500 INDEX WITH OTHER SELECT INDICES FROM 1-1-

2000 TO 31-12-2009:

The following hypothesis has been designed to study the relationship between S&P 500 Index and other select

indices.

Null Hypothesis: There is no significant relationship between S&P500 and other select indices.

Alternate Hypothesis: There is a significant relationship between S&P500 and other select indices.

TABLE 6: CORRELATION BETWEEN S & P 500 INDEX AND OTHER SELECT INDICES

Indices Correlation

Coefficient

Level of

Correlation

T-test result


accepted

S & P500 &

Sensex 0.386 Weak -15.582 0.001 H1: Accepted

S & P500 &

DOW 0.914 Strong -69.291 0.001 H1: Accepted

S & P500 &

NYSE 0.847 Strong -45.068 0.001 H1: Accepted

S & P500 &

NASDAQ 0.792 Strong -16.011 0.001 H1: Accepted

S & P500 &

HangSeng 0.653 Moderate -32.983 0.001 H1: Accepted

S & P500 &

Nikkei225 0.913 Strong -39.746 0.001 H1: Accepted

S & P500 & FTSE100

0.946 Strong -50.073 0.001 H1: Accepted

S&P500 &

SSE Composite

index

0.451 Moderate 9.663 0.001 H1: Accepted

In all the above cases, ‘p’ value is lesser than 0.01 which clearly indicates a significant relationship between S

& P 500 and other world major indices. Level of correlation is strong between S & P 500 and other major

indices in the world except BSE-Sensex, Hang Seng and SSE Composite index. It indicates stronger integration

of S & P 500 with other major world indices. Observation of table 6 reveals that, S&P500, one of the US bench

market indices, is showing strong correlation with other major indices in US i.e., DOW, NYSE and NASDAQ.

S&P500 index has different levels of correlation with the major stock market indices in Asia-pacific region. S

&P 500 has exhibited strong correlation with Japanese stock market index (i.e., Nikkei225); it has maintained



moderate correlation with Hong Kong stock market index (i.e., Hang Seng) and Chinese stock market (i.e., SSE

Composite Index). It has showed weak correlation with Indian stock market index (i.e., BSE-Sensex). There is

strong correlation between S&P500 and FTSE100 which indicates strong integration of stock markets of US

and Europe.

13. STUDY OF RELATIONSHIP OF HANG SENG INDEX WITH OTHER SELECT INDICES FROM

1-1-2000 TO 31-12-2009:

To study the relationship between Hang Seng index and other indices selected for the study, the following

hypothesis has been designed.

Null Hypothesis: There is no significant relationship between Hang Seng and other select indices. Alternate Hypothesis: There is a significant relationship between Hang Seng and other select indices.

TABLE 7: CORRELATION BETWEEN HANG SENG INDEX AND OTHER SELECT INDICES

Indices Correlation

Coefficient

Level of

Correlation

T-test result

t-

value

‘p’

value

Hypothesis

accepted

Hang Seng & Sensex 0.912 Strong 11.377 0.001 H1: Accepted

Hang Seng & DOW 0.768 Strong 11.244 0.001 H1: Accepted

Hang Seng & NYSE 0.839 Strong 18.787 0.001 H1: Accepted

Hang Seng & NASDAQ 0.466 Moderate 30.437 0.001 H1: Accepted

Hang Seng & S&P500 0.653 Moderate 32.983 0.001 H1: Accepted

Hang Seng & Nikkei225 0.555 Moderate 5.570 0.001 H1: Accepted

Hang Seng & FTSE100 0.661 Moderate 23.325 0.001 H1: Accepted

Hang Seng & SSE

Composite index 0.844

Strong 30.191 0.001 H1: Accepted

Since, ‘p’ value is less than 0.01 in all the above cases, null hypothesis is rejected and alternate hypothesis is

accepted stating that there is a significant relationship between Hang Seng and other world major indices. Hang

Seng has strong correlation with Indian stock market index (i.e., BSE-Sensex), Dow and NYSE and it has

moderate correlation with NASDAQ, S&P500, Nikkei225 and FTSE100. Level of correlation of HangSeng is

not the same with major stock market indices in US. It has maintained strong correlation with Dow and NYSE

and moderate correlation is exhibited with NASDAQ and S&P500. In Asia-pacific region, Hang Seng has

maintained strong correlation with BSE-Sensex and SSE Composite Index and moderate correlation with

Nikkei225.

13. STUDY OF RELATIONSHIP OF NIKKEI225 INDEX WITH OTHER SELECT INDICES FROM

1-1-2000 TO 31-12-2009:

Hypothesis designed to study the relationship between Nikkei225 index and other select indices is:

Null Hypothesis: There is no significant relationship between Nikkei225 and other select indices.

Alternate Hypothesis: There is a significant relationship between Nikkei225 and other select indices.

TABLE 8: CORRELATION BETWEEN NIKKEI225 INDEX AND OTHER SELECT INDICES

Indices Correlation

Coefficient

Level of

Correlation

T-test result


accepted

Nikkei 225 & Sensex 0.336 Weak 7.920 0.001 H1: Accepted

Nikkei 225 & DOW 0.785 Strong 6.973 0.001 H1: Accepted

Nikkei 225 & NYSE 0.749 Strong 17.830 0.001 H1: Accepted

Nikkei 225 & NASDAQ 0.802 Strong 35.605 0.001 H1: Accepted

Nikkei 225 & S&P500 0.913 Strong 39.746 0.001 H1: Accepted

Nikkei 225 & HangSeng 0.555 Moderate -5.570 0.001 H1: Accepted

Nikkei 225 & FTSE100 0.901 Strong 24.834 0.001 H1: Accepted

Nikkei225 & SSE

Composite index 0.332 Weak -34.801 0.001 H1: Accepted



By accepting alternate hypothesis, it can be inferred that there is a significant relationship between Nikkei225

and other world major indices. This indicates close integration of Japanese stock market with other major stock

markets in the world. As shown in the Table-8, Nikkei has strong correlation with all the major indices in the

world except, BSE-Sensex, Hang Seng and SSE Composite index. Nikkei225, major stock market index in

Japan, has not maintained the same level of integration within Asia pacific region. It has exhibited weak correlation with Indian stock market (i.e., BSE-Sensex), and Chinese stock market (i.e., SSE Composite index).

It has exhibited moderate correlation with Hong Kong stock market (i.e., Hang Seng). Nekkei225 has showed

strong correlation with all major indices in US stock market and European stock market.

14. STUDY OF RELATIONSHIP OF FTSE 100 WITH OTHER SELECT INDICES FROM 1-1-2000 TO

31-12-2009:

The relationship between FTSE 100 and other indices is tested with the following hypothesis:

Null Hypothesis: There is no significant relationship between FTSE 100 and other select indices.

Alternate Hypothesis: There is a significant relationship between FTSE 100 and other select indices.

TABLE 9: CORRELATION BETWEEN FTSE 100 AND OTHER SELECT INDICES

Indices Correlation

Coefficient

Level of

Correlation

T-test result


accepted

FTSE 100 & Sensex 0.410 Moderate -6.683 0.001 H1: Accepted

FTSE 100 & DOW 0.833 Strong -33.772 0.001 H1: Accepted

FTSE 100 & NYSE 0.789 Strong -11.894 0.001 H1: Accepted

FTSE 100 & NASDAQ 0.771 Strong 30.893 0.001 H1: Accepted

FTSE 100 & S&P500 0.946 Strong 50.073 0.001 H1: Accepted

FTSE 100 & HangSeng 0.661 Moderate -23.325 0.001 H1: Accepted

FTSE 100 & Nikkei225 0.901 Strong -24.834 0.001 H1: Accepted

FST 100 & SSE Composite index 0.480 Moderate -25.475 0.001 H1: Accepted

Significant relationship between FTSE100 and other world major indices is proved by accepting alternative

hypothesis at 0.01 level of significance. This clearly indicates the stronger correlation of European stock

markets with major stock markets in the world. FTSE100 has exhibited strong correlation with all the major

indices in the world except with BSE-Sensex, Hang Seng and SSE Composite index. As observed from table 9,

FTSE100, major stock market index in UK, has exhibited strong correlation with all major stock market indices

in US i.e., DOW, NYSE, NASDAQ and S & P 500. It indicated stronger integration of European stock market

with US stock market. Level of correlation provided by FTSE100 with major stock market indices in Asia-

pacific region is not the same for all the indices in this region. FTSE100 has exhibited strong correlation with

Japanese stock market index (i.e., Nikkei225); it has showed moderate correlation with Indian stock market

Index (i.e., BSE-Sensex), Hong Kong stock market index (i.e., Hang Seng) and Chinese stock market index( i.e.,

SSE Composite Index).

15. STUDY OF RELATIONSHIP OF SSE COMPOSITE INDEX WITH OTHER SELECT INDICES

FROM 1-1-2000 TO 31-12-2009:

The relationship between SSE Composite index and other indices is tested with the following hypothesis:

Null Hypothesis: There is no significant relationship between SSE Composite index and other select indices.

Alternate Hypothesis: There is a significant relationship between SSE Composite index and other select

indices.

TABLE 10: CORRELATION BETWEEN SSE COMPOSITE INDEX AND OTHER SELECT INDICES

Indices Correlation

Coefficient

Level of

Correlation

T-test result


accepted

SSE & Sensex 0.764 Strong -13.307 0.001 H1: Accepted

SSE & DOW 0.614 Moderate -51.311 0.001 H1: Accepted

SSE & NYSE 0.634 Moderate -30.907 0.001 H1: Accepted



SSE & NASDAQ 0.245 Weak -0.646 0.519 H0: Accepted

SSE & S&P500 0.451 Moderate 9.663 0.001 H1: Accepted

SSE & HangSeng 0.844 Strong -30.191 0.001 H1: Accepted

SSE & Nikkei225 0.332 Weak -34.801 0.001 H1: Accepted

SSE & FST 100 0.480 Moderate -25.475 0.001 H1: Accepted

As indicated in table 10, SSE Composite index has exhibited strong correlation with BSE- Sensex and Hang

Seng and moderate correlation with all the US stock market indices except with NASDAQ. It indicates that

Chinese stock market is not closely associated with US stock market. Correlation between SSE Composite

Index and FTSE100 is moderate which indicates that there is no strong relationship between Chinese stock

market and European stock market. Weak correlation between SSE Composite Index and Nekkie225 indicates

poor integration of Chinese stock market with Japanese stock market.

CONCLUSIONS:

The results of this study strongly support the view that, there is a substantial integration between Indian and

International financial markets. BSE-Sensex has witnessed a greater fluctuation which has been indicated by a

very high Co-efficient of variation compared to other select indices. Sensex, the Indian bench mark index, has

shown strong association with NYSE, Hang Seng and SSE Composite Index. The study reveals that, there is a

poor integration of BSE- Sensex with NASDAQ, Nikkei225 and S&P500. Indian stock market exhibited strong

positive correlation and perfect price correlation with global stock markets. In Asia pacific region, when

compared to Hang kong and Japan, correlation of the Indian market with global markets is not so attractive.

Chinese stock index i.e., SSE Composite index has exhibited strong correlation with BSE- Sensex and with

Hang Seng. Japanese stock index i.e., Nikkei225 has strong integration with world major stock markets. It has

strong correlation with all the select indices except Sensex, HangSeng and SSE Composite index. The European

index i.e., FTSE100 has exhibited strong correlation with all the US stock market indices and with Nekkei225,

the Japanese stock market index.

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EuroJournals Publishing, Inc. 2010

3. Lucía Cuadro Sáez, Marcel Fratzscher and Christian Thimann “ The transmission of emerging market

shocks to global equity markets”, European Central Bank- working paper series No. 724/ February,2007.

4. Ravazzolo, Fabiola and Phylaktis, Kate, Measuring Financial and Economic Integration with Equity Prices

in Emerging Markets (2002). EFMA 2002 London Meetings; Cass Business School Research Paper. Available at SSRN: http://ssrn.com/abstract=314833 or doi:10.2139/ssrn.314833

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