Examining the Viability of Social Responsibility of Microfinance by the Bank Compartamos, Mexico

Examining the Viability of Social Responsibility of Microfinance by the Bank Compartamos, Mexico

José G. Vargas-Hernández (University of Guadalajara, Mexico), María Alejandra Santos Huerta (University of Guadalajara, Mexico) and Kinkini Bhattacharjee (Katwa College, India)
DOI: 10.4018/978-1-5225-5240-6.ch008

Abstract

Microfinance achieves financial inclusion to the poor population stimulating the creation of sources of income and employment. Banco Compartamos is an institution that has more market share and has more than 20 years providing financial services to their specific sector of the population. The chapter analyzes the viability of social responsibility of microfinancing by the Compartamos banco of Mexico for the period 2002-2015. The results show that microfinance working on social responsibility by the Compartamos Banco is not viable as there are the results of inverse correlation results. However, the banco served some social responsibility by means of pulling people out of poverty. It further concludes that these organizations fulfill their main objective, which is to benefit the people of the base of the pyramid in Mexico.
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Origin Of Microfinance

Microcredit emerged as a mechanism to facilitate access to monetary resources at a lower cost and charges set by usurers and moneylenders. Microcredit occurs when groups of people establish funds and savings and loan cycles. Most microfinance arise from a solidarity work so unfolded as nongovernmental organizations (NGOs), which, in attempting to meet the needs of disadvantaged communities in the country, eventually became involved in the activities of credit unions.

The financial activity of NGOs involved the receipt of funds from savings of the general public is restricted and is necessarily subject to official supervision activity. At that time was not regulated. Microfinance is seen as an alternative financial inclusion or as a mechanism to provide the “seed capital” to carry out a productive initiative or as a mechanism for governmental financial support to low-income population. But not necessarily all the microcredits help to support and encourage micro business duly formalized. As the report National Microenterprise Financing Program (2014) says are definitely an alternative to detonate micro business or occupation means for segments of the population without access to traditional credit.

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