THE EFFECTS OF THE BORROWER TRANSACTION COSTS, CREDIT RATIONING AND SEGMENTED MARKETS ON MICRO CREDIT MARKETS IN MALAWI: A STUDY IN THE MICRO CREDIT MARKETS IN MALAWI.
Borrowers transaction costs, Credit Rationing and Segmented Markets.
Abstract The main objective of this study was to analysis of the effects of the borrower’s transaction costs, credit rationing and segmented markets on micro credit markets in Malawi: A study in micro credit markets in Malawi, using micro finance institutions (MFI) across the country as the case study. The MFIs which have sampled are as follows Select Financial Services which commenced operations in Malawi in late 2009 with first disbursements occurring in February 2011. In August 2010, Select Malawi entered into a long-term debt financing agreement with the Soros Economic Development Fund, who were keen to support a housing-focused lending business in this economically disadvantaged country. This funding was converted into local currency using a back-to-back facility with FMB Malawi. Another MFI which has been used in this case study is National Economic Empowerment Fund Limited which is a Government owned Microfinance Institution whose mission is to economically empower ordinary and underserved Malawian (particularly women, youth and persons with disability) through the provision of quality, affordable and sustainable microfinance services for improved livelihoods. NEEF is a radical rebrand of the Malawi Enterprise Development Fund Limited whose reconstitution happened in September 2020 with a mandate is to look into the broader objectives of microfinancing with focus on economic empowerment. The institution operates on a license that was issued in January 2015 by the Reserve Bank of Malawi as a Non-Deposit Taking Microfinance institution. Ufulu Finance Limited is a another micro-finance Company that provides loans to Civil Servants with low interest rates starting from K5, 000.00 to K2, 000,000.0 which the researcher sampled to carry the study and finally the researcher sampled PCL SACCO and UNDP SACCO. Based on the field data from Malawi microfinance industry and the general public, the research project analyses the effects of the borrowers transaction costs, credit rationing and segmented markets of micro loans. It shows how and what extend is the microfinance institutions and the general public are affected by the variables. Two research hypotheses were formulated and tested using the chi square, to achieve the objectives of this study. Percentages and frequencies are also employed in the analysis. The research was descriptive in nature involving quantitative methods which was administered through secondary data. Findings revealed that borrowers transaction costs are fixed by the reserve bank of Malawi except other unknown costs which hidden, it is also revealed that borrowers transaction costs are higher as compared to Sub Sahara Countries due to poor ICT infrastructure since loans are not applied online which reduces borrowers transaction costs. It was also revealed that credit rationing is done by MFIs in order to hedge credit risks, finally it was also revealed that MFI market segmentation is done due to market risk and profitably.
"THE EFFECTS OF THE BORROWER TRANSACTION COSTS, CREDIT RATIONING AND SEGMENTED MARKETS ON MICRO CREDIT MARKETS IN MALAWI: A STUDY IN THE MICRO CREDIT MARKETS IN MALAWI. ", IJSDR - International Journal of Scientific Development and Research (www.IJSDR.org), ISSN:2455-2631, Vol.8, Issue 3, page no.1096 - 1100, March-2023, Available :https://ijsdr.org/papers/IJSDR2303181.pdf
Volume 8
Issue 3,
March-2023
Pages : 1096 - 1100
Paper Reg. ID: IJSDR_204745
Published Paper Id: IJSDR2303181
Downloads: 000347240
Research Area: Management
Country: Lilongwe, centre, Malawi
ISSN: 2455-2631 | IMPACT FACTOR: 9.15 Calculated By Google Scholar | ESTD YEAR: 2016
An International Scholarly Open Access Journal, Peer-Reviewed, Refereed Journal Impact Factor 9.15 Calculate by Google Scholar and Semantic Scholar | AI-Powered Research Tool, Multidisciplinary, Monthly, Multilanguage Journal Indexing in All Major Database & Metadata, Citation Generator
Publisher: IJSDR(IJ Publication) Janvi Wave
