Literature review on microfinance banks in nigeria

This method of keeping savings is risky because it might be stolen, lost or wasted in extravagant spending. Moreover, returns which would have accrued to the depositors in form of interest are forfeited. The contribution of government to alleviate poverty through the establishment of microfinance banks appears a little progress. Inspite of the establishment of microfinance banks, it was observed that most people are not able to obtain loan.

History of Microfinance in Nigeria

This is attributed to a number of challenges such as the high level of interest rate, lack of collaterals required by the commercial banks before loans can be granted which necessitated the establishment of Microfinance to address these economic imbalances. If the banking industry continue to meet the demands of Nigerians especially the rural poor, this shows that there is a gap which need to be filled and this can be done through the contribution of government by establishing more microfinance banks in Nigeria to help in alleviation of poverty.

Another problem observed is the inability of prospective borrowers of most microfinance banks to repay their loans as at when due. This may be attributed to high rate of poverty in the country. The high rate of poverty is noticeable in such area such as unemployment, high rate of inflation, non-payment of salaries, mismanagement of loan granted to rural dwellers, infrastructural deficiencies, such as power, road network, etc. Also Nigerian economy consists of individuals who feed from hand to mouth.

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The loans when granted are channeled to other areas such as feeding, payment of bills, school fees, hospital bills and others instead of using it for the intended business purpose. They are as follows: 1. To find out the rate at which rural dwellers deposit their money in microfinance banks rather than putting it under pillows. To find the contribution of government in alleviation of poverty through the establishment of microfinance banks. To find out the rate at which rural dwellers are able to repay their loans.

H1: The rate at which rural dwellers deposit money in microfinance banks is high than they keep under their pillows. H0: The government has not assisted microfinance meet the needs of rural dwellers and communities. H1: The government has assisted microfinance meet the needs of rural dwellers and communities H0: Microfinance borrowers react negatively towards loan repayment. H1: Microfinance borrowers react positively towards loan repayment.

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What is the rate at which rural dwellers deposit their money in microfinance banks rather than putting it under their pillow? What is the contribution of government in alleviation of poverty through the establishment of microfinance banks in Nigeria?

History of Microfinance in Nigeria | Social Economy | Poverty

Why do most Microfinance borrowers react negatively towards loan repayment? Government; The findings of this study will be useful to government in that it will help them to know the importance of MFI thereby knowing ways of improving the quality of their services. The result of the study will also bring out the areas that need improvement and make suggestions for improving on them. Owners; It will also be useful to those planning to open Microfinance banks to know the usefulness of microfinance banks as catalyst or stimulus for poverty alleviation in rural settings as way of developing rural banking.

Scholars; Students also will find it very useful in some research work on project issues by boosting their knowledge about microfinance banks in the alleviation of poverty. Those who need referencing material materials on role of micro financing in alleviating poverty will find this study useful. Inadequate finance: As a student, financial difficulties limit the researcher from studying the activities of all banks and also limit the volume of data collection; e. Time constraint: There was no time to conduct an enormous research. Inability to get access to some Microfinance banks to get more information about their records and some other useful information about the work also limit the research data collections.

Environmental constraint: The environment in which the research work was written restricted the researcher from going out and so the researcher was faced with the problems of how to reach out the field of research and coordinate activities as planned. This study explores the immense role of the microfinance banks in the alleviation of poverty in Nigeria.

The researcher revealed that the rate at which rural dwellers deposit their money in their pillows rather than in microfinance banks is high. Data were collected through primary and secondary sources. As regarded to primary sources, questionnaires and interviewed were used. This study aim at unearthing the powerful strategy for alleviating poverty in general and rural poverty in developing country, to analyze the strengths, weakness, opportunities and threats of MicroFinance institutions in the selected region, to access the problems encountered by MicroFinance service consumers in the rural areas.

To achieve this purpose, 4 four research questions were raised Vis: how does MicroFinance institution operate in selected rural settling in the country? What are the problems encountered by MicroFinance service consumers in the rural areas?

What are strengths, weaknesses, opportunities and threats of MicroFinance institutions in the selected region? In addition, hypotheses were formulated to guide the study namely: MicroFinance Banks helps in the development of rural areas. The researcher also made some Recommendations among which were: MicroFinance Banks should involve themselves in the catchments areas.

Because is the last hope of rural dwellers.


  • Analysis of the Effect of Microfinance Institutions on Poverty Reduction in Nigeria;
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  • History of Microfinance in Nigeria | Social Economy | Poverty.
  • THE IMPACT OF MICROFINANCE BANKS IN DEVELOPMENT OF RURAL AREAS IN NIGERIA.

Abosede, A. An examination of Literature. Nigeria Journal of Business Administration, Vol.