Sociology

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Browsing Sociology by Subject "clients, group lending method, socioeconomic developmen"

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    An Assessment of the Amhara Credit And Saving Institution (Acsi) Lending Practices: The Case Of Kuarit Woreda, Amhara Region, Ethiopia
    (Addis Ababa University, 2019-10) Yihunie, Sintayehu
    Lack of access to credit is considered to be one of the major constraints the poor are confronted with when they are planning to make an investment. Hence, microfinance institutions intended to provide credit to those poor who are striving to improve their living situation but they have no access to credit services. Thus group lending is used as a mechanism to address the credit needs of those “active poor" by extending small loans in a group. So, studying the effectiveness of this method of lending is crucial. To this end, the main objective of this study was to assessing the Amhara Credit and Saving Institution lending practices taking Kuarit branch as a case with a special focus on group lending method. Specifically, the study looked into aspects such as nature of group formation, composition, and trust among group borrowers; the effectiveness of group lending method in including the extremely poor people; the contributions of the institutions’ loan on the clients living condition; challenges and opportunities of group lending method in comparison with other lending methods; and the reasons why clients use ACSI credit service rather than other sources of loan notably Equib, Mahiber, and money lenders. In doing so, the study employed methodological triangulation i.e. mixed-method research approach wherein the qualitative approach was the principal one. Consequently, the results of the study shows that, even though group lending method is thought to be an effective method to the inclusions of extremely poor people, still this model is not effective in comprising the poor since the borrowers create their own specific kind of collateral so as to reduce the costs from member's dropout. In addition, the study reveals that the trustworthiness of an individual within the group is determined by his/her physical asset status rather than their strong relationship or network within the group. The study further reveals that though group lending is the main loaning method by the institution, there are clients who have a greater preference for individual loans than borrowing in a group. The study also disclosed that clients preferred ACSI loans rather than loans from informal financial sources because in the latter case the amount of loan is too small, the interest rate is high, difficult to access lenders and a small amount of capital they have. From the results of the study one could fairly conclude that regardless of the group formation procedure and who the clients are, the credit service of the institution has assisted the borrowers. Yet, the benefits may vary from one client to another. Keywords: clients, group lending method, socioeconomic development.