Methodologies and Challenges of Empirical Evaluation
The notion of handling low income by various firms to eliminate poverty has become an issue of global interest. As a result, there has been increase of companies across the globe that provides insurance services, credit and savings. Evidently, economies in third world countries have also embraced microfinance to reduce poverty. They achieve this by providing credit to individuals with low salaries to enable them start a business.
This step of using microfinance is important because it can improve the economy of a society. In this regard, it is essential to involve in statistical studies that will give a clear outcome of microfinance. It will also verify the effect it has on people’s lives. The other advantage of microfinance is that it can assist low income families to educate children. A good way to measure whether microfinance has been of benefit is by checking on the improvement of the economy.
In a society, wealthy people tend to manipulate the less fortunate by obtaining loans in high quantities. Factors that restrict individuals from taking the loans include bad perspective concerning the lending firm. Illiteracy is another aspect that hinders people from borrowing microfinance loans. Methods that measure the outcome of finance on people’s outcome are based on the nature of their business or jobs. This implies that the income of people can be determined by their education and skills in business.
In addition, age, experience and the urge to accomplish goals are other methods that are used to determine the effectiveness of microfinance in a person. Equally, microfinance firms also use these factors to award loans. Age and the capability to pay back the loan determine if one has a chance of getting the money. Furthermore, people with previous lending history can easily access loans contrasted to first timers. Researchers need to use effective methods to handle well the outcome of microfinance on individuals’ lives.
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