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The Partnership for Responsible Financial, previously known as the Microfinance CEO Working Group, is a collaborative effort of leading international organizations and their CEOs active in the microfinance and inclusive finance space, including direct microfinance practitioners, and microfinance funders.
Unintended consequences of microfinance can include informal intermediaton: that is, some entrepreneurial borrowers become informal intermediaries between microfinance initiatives and poorer micro-entrepreneurs. Those who more easily qualify for microfinance can split loans into smaller credits to even poorer borrowers.
Indeed, the local microfinance organizations that receive zero-interest loan capital from the online microlending platform Kiva charge average interest and fee rates of 35.21%. [44] Rather, the principal reason for the high cost of microcredit loans is the high transaction cost of traditional microfinance operations relative to loan size. [ 45 ]
Village banks are highly democratic, self-managed, grassroots organizations. They elect their own leaders, select their own members, create their own bylaws, do their own bookkeeping, manage all funds, disburse and deposit all funds, resolve loan delinquency problems, and levy their own fines on members who come late, miss meetings, or fall ...
In light of the lack of financial access for the poor, over the past few decades developments in micro finance institutions have managed to provide financial services to some of the world's poorest, and achieved good repayments. There are still work to be done to build inclusive financial systems.
Since 1991, the members of Accion in the U.S. have provided more than 60,000 loans to small business owners and disbursed more than $500 million in capital. Additionally, Accion provides business advising and training services—both in person and through online educational resources—to tens of thousands of entrepreneurs each year. [20] [21]
Kiva distributes funds that it receives to microfinance institutions, social impact businesses, schools or non-profit organizations [5] [6] and does not generally directly provide funds to specific individuals. [7] These organizations are charged fees by Kiva and borrowers pay interest on most loans. [8]
FINCA International is a non-profit, microfinance organization, founded by John Hatch in 1984. FINCA is the innovator of the village banking methodology in microcredit and is widely regarded as one of the pioneers of modern-day microfinance.