Microfinance Essay Example | Topics and Well Written Essays - 1250 words

Microfinance - Essay Exampleregular banks, in most cases because they atomic number 18 unable to offer adequate collateral. (Gert van Maanen, 2) There are two schools of thought regarding the entire industry of Microfinance the first advocates non-profit lending, while the other takes the opposite view- that for-profit. In this regard, this essay is written to comprise arguments that profit microfinance institutions (MFIs) are better off by engage profits making them more sustainable than non-profit MFIs. This paper will argue that by microfinance institutions (MFIs) pursuing their own interest (profits) this is the only way to be sustainable & will lead to more outreach & more the greater good for all impoverished people despite the fact MFIs are for-profit.Years of research indicate that for-profit MFIs are more sustainable than non-profit microfinance institutions because they have higher growth rates, access to a large pool of funding and are much more profitable. According to Global Microfinance Forum (1), profit-maximizing MFIs run just as normal businesses do, making sufficiency profit to fund themselves and benefit owners and investors. For-profit MFIs pursue profits because they are market driven. They could rely on donor funds in their initial stages, barely unlike non-profit MFIs, they specifically stipulate that their goal is to be financially self-sufficientthe ability to rely on themselves financially from within the institution. Hence, by gaining profits they fatality to grow, expand the number of institutions lower all possible costs and ultimately reach the most amounts of people possible. By relying on themselves, for-profit MFIs are sustainable.The opportunities for profit MFIs are greater in terms of availability and accessibility for investor capital. In addition, with their own sources of funds, potentials for expanding their target market are vast. Supporters for nonprofit MFIs stipulate that these institutions solicit funds from d onors, grants, government