Credit policy of microfinance institutions and people's standards of living

Abstract

The research intended to establish the effects of credit policy and peoples standards of living a case study of pride microfinance. The objective of the of the study was to examine the role played by credit terms on peoples standards of living ,to assess the role of credit standards on the living standards of people ,to investigate the effects of collection efforts on peoples standards of living. The research methodology adopted both descriptive and analytical research design based on semi-structured questionnaires to gain an in-depth understanding of credit policy management and standards of living. A sample size of 63 respondents was used. Stratified sampling method was adopted for the study. Data was collected from both primary with the help of questionnaires designed using likert scales and secondary data got from textbooks, internet, journals and newspaper articles. Besides this, there exists a strong positive relationship of 0.722 (using correlation SPSS) between credit policy and standards of living. This implies that the effectiveness of credit policy leads to higher improvement of standards of living.. The researcher recommends that the management should review the implementation of credit policies, interest rate should be reduced from 36% per year to at least 24% per year just like other lending institutions, and payback period must be extended to at least beyond one year. Pride Microfinance should train its clients on how to beneficially use the borrowed money. In addition to this, it should listen to client’s grievances in order to efficiently serve their interests xiii and so achieve its target goals. The above measures if taken into consideration will strengthen the effectiveness of credit policy towards achieving the set objectives and enhance better standards of living