Ideas
sustainability and expansion depend on loan repayments, as well as on cost effectiveness (sql reduces cost).
NGO coverage is higher in villages with better opportunities for productive activities (Mallick Nabin,2018).
- need mechanisms that allow NGO to alleviate poverty by operating in areas with lower productivity.
From Mallick Nabin 2018
Microfinance organisations target non-poor
poverty alleviation implies:
- NGO will take the program to the locations where profit-driven financial institutions do not reach and target the poor households in a given location.
- However, sustainability and expansion of the microfinance program depends on generating enough profit on loans, which in turn depends on loan repayments, as well as on cost effectiveness.
Location and MFI profitability
- borrowers close to market have lower cost of market access, lower cost of doing business
- borrower close to market also may have better productivity covariates, i.e., more entrepreneurial environment (entrepreneurial knowledge and information), better price information (choose what to produce - Kerala fish market) better access to public goods (electricity), cheaper cost of inputs
