Impact of Microfinance in Pakistan
Literature Review
Many businessmen and business analysts view the investment as the most basic action to create an improvement and add to the progress of one economy. In the most of the developing countries, the economy remains stable and in the stage of peril whenever the country is plagued by different uncertainties and economic changes. The uncertainties may come from the participation of the country in the globalization. Moreover, countries in developing state never fail to respond in different demands from the international market and indeed continuously promoting its internal economic development through series of financial supports. Various economists valued the importance of the external support in the aim of the individuals and the businesses to establish the competency in the domestic market. Clearly, the financial support of the microfinance organizations grew popular because of the continuous need of the people. The impact of recession is also a challenge that the people should manage and find an adequate solution to maintain the standard of living. When the microfinance institutions reached a certain area, the development is possible. Earlier, most of the developing nations were facing serious liquidity problems thus compromising economic growth. Now, it is important to study how the changes in financial sector contributed in the overall growth of the economy, particularly in Pakistan (Shahbaz, Ahmed, & Ali, 2008).
In the microfinance industry, various players that can be both government and non-government institutions attempt to shape the economy. The applied influence of the financial organizations was crafted to initiate, nurture, motivate, gain the advantage and capacity, and improve the lives of the families and the small and medium type of businesses. In short, there is an increasing opportunity for the people (Rudolf, 2006). It is amazing that the developing like the India gain a significant growth due to the application of the various microfinance institutions. Accordingly, the applied strategy is the group-based lending that proposes to empower the poor women and have a mission for building the capability and confidence in the economy through the use of credit (D’Espallier, Guérin, and Mersland, 2009; Kumar, 2009). This clearly changes the traditional role of the women in the country. In group-based lending, the goal is based on the schemes that increase the social cohesiveness of the staff and to foster good cooperation and team effort. The payout process of the individual depends on the performance of the whole group and the huge temptation to reduce the individual contribution can be considered as the greatest drawback in the procedure. But the incentive schemes particularly in the savings mobilization promote the benefit. On the other hand, the micro credit grows the popularity in the farmers and artisans that can help in their transformation as entrepreneurs. Due to the lack of technical knowledge and market intelligence the confidence of the farmers and artisans are lowered. The necessary expertise is supported by the micro credit to help them be a better entrepreneur (Kumar, 2009).
The marketing strategies are also applied in micro finance institutions which start in planning and setting the objectives. The identification of the current challenges in the stream of financing can help the institution reach and identifies their own version of marketing strategies (Murray, 2008). The initiatives of the microfinance institutions are based on the concept of the organization to improve the customer services and launch the new type of services. Well-defined strategies can help the organization to satisfy the success and the power or marketing can be realized. Marketing keeps the trust of the people on the business and it can prevent the business from the bankruptcy and liquidation. Therefore, different marketing tactics can foster the initiatives of the institution to deliver its effectiveness in the market (ACCION, 2008; Pollinger, Outhwaite, and Cordero-Guzman, 2007). Based on the study, there are two marketing strategies are revolving in the idea of branding and customer care. Through the branding, the company can create an identity and appeal to their customers and to the other potential customers. Microfinance provides the strategies based on the idea of marketing and customer care to help their customers reach their demands and goals, understand their needs, fulfill their desires and enjoy their loyalty which in return may be the advantage of the business. The marketing strategies implemented by the successful microfinance institutions should be applied in the other financial institutions to help them establish the effectiveness and advantage as the provided for financial needs. In a deep sense, the microfinance institutions provide additional economic capability in most of the developing countries. The strong foundation microfinance institution can proves long-term advantage and additional contribution to the economy in development of the country.
References:
ACCION, (2008) Marketing Strategies for Microfinance, Building Sustainable, Commercial Microfinance Programs [Online] Available at: http://www.accion.org/Document.Doc?id=466 [Accessed 11 January 2011].
D’Espallier, B., Guérin, I., & Mersland, R., (2009) Women and Repayment in Microfinance [Online] Available at: http://www.rume-rural-microfinance.org/IMG/pdf_WP_200902.pdf [Accessed 11 January 2011].
Kumar, V., (2009) Developing Credit Bureau IFC’s Group Effort It is not just Technology: Planet Finance Opportunities and Challenges, Microfinance Focus [Online] Available at: http://www.edacapitalconnect.com/pdf/Microfinance-Focus-January-2009.pdf [Accessed 11 January 2011].
Murray, S., (2008) For Microfinance Marketing [Online] Available at: http://www.swwb.org/files/pubs/en/marketing_for_microfinance_e.pdf [Accessed 11 January 2011]
Rudolf, K., (2006) Access to Employment and Income Opportunities: Approaches and Methods among Roma and Other Disadvantaged Groups [Online] Available at: http://www.osce.org/publications/odihr/2006/03/23160_798_en.pdf [Accessed 11 January 2011].
Shahbaz, M., Ahmed, N., & Ali, L., (2008) Stock Market Development and Economic Growth: Ardl Causality in Pakistan, International Research Journal of Finance and Economics, 14 [Online] Available at: http://www.eurojournals.com/irjfe%2014%20shahbaz.pdf [Accessed 11 January 2011]
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