Verified Document

Microfinance My Project Is To Open A Essay

Microfinance My project is to open a microfinance bank, which specializes in low value, non-collateral loans for small business, typically in underprivileged parts of the world (Opportunity.org, 2013). This will open in New York, serving people in the city's poorest communities, especially those struggling with unemployment. In some parts of the city, the annual median household income is below $10,000, and people in those communities become trapped in poverty (Venugopal, 2011). Microfinance was instituted by Grameen Bank in Bangladesh by Mohammed Yunus, who won a Nobel Peace Prize for the project (Grameen, 2013; Nobelprize.org, 2013). The project would utilize funds raised in New York's banking community to provide loans for people in New York's poorest areas, and to provide business skills training to help them to improve their earnings and standard of living.

Model and Competition

The business model of microfinance is different from that of a conventional bank. Microfinance does not aim to maximize profits for its shareholders but to maximize opportunity for its customers. The financiers of microfinance typically earn a nominal return on their investment, while most profits are plowed back into more lending, which helps to grow the bank. It...

Microfinance has been utilized throughout the developing world, in nations where the conventional banking systems do not deal with small borrowers. However, if growth is too fast, the quality of the borrowers declines, leading to crisis in the microfinancing industry (Chen, Rasmussen & Reille, 2010).
The business model is structurally similar to that of other banks. The bank must first raise money, something that can be done through small scale donations from New York's financial community. There should not be any shortage of people to lend to as well, and they must be vetted by the bank. The United States is a relatively untapped market for microfinance, with none of the top 50 firms located in the country (Swibel, 2007), however, as its banking system is considered sufficiently robust to handle most customers. Citigroup (2013) has become involved in microfinance and online lender Kiva (2013), which takes a lot of donations from the U.S., has started lending to American entrepreneurs as well. There are also a variety of crowd-funding websites that provide similar opportunities and would compete with the new venture for quality businesspeople who…

Sources used in this document:
Works Cited:

Bloomberg. (2013). Consumer interest rates. Bloomberg. Retrieved October 11, 2013 from http://www.bloomberg.com/markets/rates-bonds/consumer-interest-rates/

Chen, G., Rasmussen, S. & Reille, X. (2010). Growth and vulnerabilities in microfinance.

Citigroup. (2013). Corporate citizenship: Microfinance. CITI. Retrieved October 11, 2013 from http://www.citigroup.com/citi/citizen/microfinance/

Grameen. (2013). Grameen Bank: Bank for the poor. Grameen-Info.org Retrieved October 11, 2013 from http://www.grameen-info.org/
Kiva. (2013). Kiva launches online microfinance in the United States. Kiva. Retrieved October 11, 2013 from http://www.kiva.org/press/releases/release_20130114-20
Lutzenkirchen, C. (2012). Microfinance in evolution. Deutsche Bank. Retrieved October 11, 2013 from http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000294314.pdf?kid=dbr.inter_ghpen.headline
NobelPrize.org. (2013). The Nobel Peace Prize for 2006. Nobel Prize.org. Retrieved October 11, 2013 from http://www.nobelprize.org/nobel_prizes/peace/laureates/2006/press.html
Opportunity.org. (2013). What is microfinance? Opportunity International. Retrieved October 11, 2013 from http://www.opportunity.org/what-is-microfinance/
Swibel, M. (2007). The top 50 microfinance institutions. Forbes. Retrieved October 11, 2013 from http://www.forbes.com/2007/12/20/microfinance-philanthropy-credit-biz-cz_ms_1220microfinance_table.html
Venugopal, A. (2011). Census pinpoints city's wealthiest, poorest neighbourhoods. WNYC. Retrieved October 11, 2013 from http://www.wnyc.org/story/174508-blog-census-locates-citys-wealthiest-and-poorest-neighborhoods/
Cite this Document:
Copy Bibliography Citation

Related Documents

Microfinance - As It Relates
Words: 3040 Length: 10 Document Type: Term Paper

On the one hand, they represent the needs of the poor population's access to loans and, in this sense, their operations seem selfless and focused on social well-being. On the other hand however, these entities are for-profit economic agents which need to register revenues, to generate funds and to be financially self-sustainable. This need is obvious at the level of all institutions, but even more so at the level

Banking Budget Analysis Opportunity Bank Budget Analysis
Words: 1204 Length: 3 Document Type: Essay

Banking Budget Analysis Opportunity Bank Budget Analysis Opportunity Bank is a convenient store for other professional banks. Essentially, it takes the stance that all people reserve the right to bank as they please and deserve an opportunity to do. This then provides them a greater sense of opportunity for each and every individual that walks in the doors. Opportunity Bank helps provide credit to those most in need, and thus believes that

What Has Led to the Change in Custom Jewelry in Last 5 Years
Words: 13278 Length: 35 Document Type: Dissertation

Change This study analyzes outsourcing trends in the next decade. The study assesses this by focusing on the past and current trends, problems and issues in outsourcing via semi-structured interviews. Major trends and processes will be revealed and assessed for their relevancy, depth and breadth. Companies belonging to most industries are very much considered to be the units that are vertically integrated, or so-called usual industrial firms (Stigler, 1951), where activities

Boa in China With Approximately
Words: 1414 Length: 4 Document Type: Research Proposal

Investment requirements to enter the Chinese market are high. In order to reach the retail market, Bank of America would need to develop a branch network, which is very capital-intensive. Given the high degree of regulation in the Chinese banking sector, Bank of America should enter the market via partnership with or purchase of an existing player in the market. This bank should be chosen with respect to how well

International Lending Implications International Lending
Words: 2293 Length: 8 Document Type: Thesis

Liquidity shocks on the international arena can have a strong negative impact on less developed countries whose access to funding sources is already reduced. The clearing risk is a specific risk, which combines credit risk, in the sense that it results from a counterparty's inability to meet its liabilities, market risk in the sense that it is caused by market shifts (general and specific market risk) between the time a

Consultant Evaluation and Healthcare Industry
Words: 4888 Length: 15 Document Type: Research Paper

Com). A certain amount of errors is to be expected, but there should not be so many that it demonstrates a certain level of skewedness about the model in its entirety. Thus, if the NHI model is the one which is selected, then it needs to be tested against a range of different scenarios. The following demonstrate some truly relevant what-ifs: what if the doctors only move half the projected

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now