Microfinance Sector in Sri Lanka: Opportunities and Growth Strategies

The provided document is a solution to an assignment that involves analyzing the microfinance sector in Sri Lanka. The assignment includes a list of references to relevant studies and reports on the topic, providing insights into the opportunities and growth strategies of the sector. It also includes two illustrations comparing Sri Lanka with South Asia on the basis of financial indicators.

To investigate the impact of micro-finance on the
growth of small business units operating in the
developing economies

Table of Contents
DISSERTATION TOPIC................................................................................................................1
INTRODUCTION...........................................................................................................................1
Overview.....................................................................................................................................1
Aim..............................................................................................................................................3
Objectives....................................................................................................................................3
Question......................................................................................................................................3
Rationale of study.......................................................................................................................4
Significance of study...................................................................................................................4
Scope of study.............................................................................................................................4
LITERATURE REVIEW................................................................................................................5
RESEARCH SPECIFICATION......................................................................................................6
TIME SCALE..................................................................................................................................8
STRUCTURE OF DISSERTATION..............................................................................................9
REFERENCES..............................................................................................................................11

DISSERTATION TOPIC
To investigate the impact of micro-finance on the growth of small business units
operating in the developing economies.
INTRODUCTION
Overview
Micro fiance in developing countries has led to tremendous growth of enterprise by
supporting people with easy loan services. It is the credit facility given to poor entrepreneurs or
small business to lacks access to capital. The financial product of micro fiance are micro savings,
micro loans and micro insurance which are core capital need of society. The concept of mic
came into existence in 1970 when social entrepreneur started lending money to poor people on
large scale (Wijesiri, Viganò and Meoli, 2015). This ideology defined the need of capital
requirement of society which is restriction individual growth.
In accordance with emergence of micro fiance it was derived that million of entrepreneur
and poor people own innovative ideas but lacks capital investment and therefore the individual
are spending their time in unproductive activities. However, it can be said that micro fiance is
growth opportunity for the poor entrepreneurs across the globe for implementing there invention
and vest their time and money in productive activities (Silva, 2012). Further, it can be argued
that micro finance is not only beneficial for the poor people but is also effective for growth of
economy. Emergence of innovative ideas and small business will increase economic contribution
and will support growth of country by eliminating poverty and creating employment.
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Apparently, micro fiance is not a donation by is financial support to poor people for
staring their own business. It is effective plan for Sri lanka because it will support financial
access for the low income group of economy. Sri Lanka is lower middle income country which
is located in the Indian Ocean and is considered as fastest growth economies in South Asia. The
economy with population of 20 million people and gross domestic product of 3280 USD is
categorized among low or middle level income group (Micro finance sector in Sri Lanka:
Opportunities and growth strategies, 2016). The highest growth rate of GDP experienced by
economy is 7 % which depicts human development opportunities of country. Further, it can be
said that financial system of country is diverse in accordance with other developing economies
like it has 47 licensed financial organizations, 20 commercial banks, 9 leasing firms and primary
credit cooperative societies, provident funds and primary pension and dealer facility.
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Illustra
tion 1: Comparison of Sri Lanka and South Asia on the basis of
financial indicators
(Source: Micro finance sector in Sri Lanka: Opportunities and
growth strategies, 2016)

In accordance with the background it is determined that there is need of accelerating
micro credit facility in Srilankan economy to support growth of poor people and eliminate
poverty and unemployment. The dissertation is based on outlining growth of small business in
Sri lanka which integration of micro finance which enables capital access to poor and lower
income society of country.
Aim
“To investigate the impact of micro-finance on the growth of small business units
operating in the developing economies: A Study on Sri Lanka.”
Objectives
 To analyze importance of micro finance on growth of small business
 To assess growth of developing economies by integrating with micro finance
 To ascertain benefits of micro finance on poor entrepreneurs of Sri Lanka
 To suggest measure for successful implementation o f micro fiance in Sri lanka
Question
 Discuss importance of micro finance on growth of small business?
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Illustration 2:
Comparison of Sri Lanka and South Asia on the basis of financial
indicators
(Source: Micro finance sector in Sri Lanka: Opportunities and growth
strategies, 2016)

 How growth of developing economies is supported by integration of micro finance?
 What are the benefits of micro finance on poor entrepreneurs of Sri Lanka?
 What recommendation can be made for managing successful implementation of Micro
finance in Sri lanka?
Rationale of study
The motive of conducting study on micro fiance services in Sri Lankan is for person and
academic interest because the topic suggest support to poor entrepreneur of society and enables
growth of economy. The discussion over research topic will help in analyzing worth of chosen
topic and importance of topic for the particular reason which it is chosen. The motive behind
choosing this specific topic is to remark growth of startups and small entrepreneurs with the
implications and support form micro credit.
Significance of study
The nature of research topic is significant in nature as it is base on impact of micro
finance on growth of overall economy of Sri Lanka. This will help in gaining sights over various
aspects and elements of micro credit facility which is benefits low middle income of country.
Further, it is important because it will outline views of poor entrepreneurs who experienced
growth by capital access from micro credit facility. Further, it will suggest measures which can
be recommended to manage changes and improvement in micro funding facility and it supports
capital access of poor society of economy. The topic has its own importance of economy and
society as whole.
Scope of study
The research topic is wide in nature as it will be focusing on micro credit facility, its
impact on growth, economic benefits and supports to poor entrepreneur of Srilanka. In this
researcher will outline impact of micro credit facility on growth of lower income population of
Sri Lanka. It will study individual behavior b when conducting primary data collection.
Moreover, the scholar of research is not only restricted to view of primary respondents but the
scholar will aim at critical analysis which will helps in making comparison of one term from
different perspective. However, keywords of study will be micro credit, finance, loan, capital,
functional, capital access, poor population, employment, entrepreneur and growth.
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LITERATURE REVIEW
According to De Mel, McKenzie and Woodruff, 2012, it is articulated that micro fiance
has led to tremendous change for lower income population group of world by enabling capital
access to people in need. The ideology came int o existence when rich people group of society
started providing loan to poor people at large scale for the sake of maximizing interest. In
accordance with this, it was determined that poor people lack funds which is limiting their
success and growth of economy. However, emergence of micro loan has become support system
for the million of people like poor entrepreneurs who were unable to grow their startup because
of lack of capital. On the other hand, Hansen, 2015, discussed about micro credit help to poor
with small loans which is the best service to create capital access and empowering poor people.
In these people have opportunity to save money and repay when recovered or generated. Micro
finance support financial security because it is not just a donation. The objectives of micro credit
services is to encourage self sufficiency which leads to economic growth and development. It is
determined that majority of poor section of society have skills to be employee or set startup for
maximizing basic earning but the individuals lacks fund therefore the credit facility came up with
capital access where the professional analysis strict requirement of people for which person s
seeking for credit.
However, a per the views of Silva, 2012, micro credit is effective for developing
economies like Sri Lanka. The study outlined Micro finance sector landscape in Sri Lanka from
which it is determined that country lacks financial inclusion parameters like, insurance,
parameters, coverage of pension, credit penetration, lack of credit access to SME's, etc. The key
objective of micro finance sector of Srilanka is reaching out to lower income group and poor
people and seeking their credit needs is key concern of micro finance services of country. It is
argued that there is remarkable change and growth of economy with support of micro credit
facility and therefore it can be said that it is beneficial approach for society. In accordance, it is
determined that MFIs target particular age group with specific financial products such as
insurance and pension to enhance their credit offering services in Sri Lanka.
As per the views of Thrikawala, 2017, regulatory framework of micro finance in Sri
Lanka is based on capabilities of poor people. In this interest rate are set accordingly to ability to
pay which is the best part of gaining trust and enabling consumer protection. However, interest
rate and its impact are beneficial for economic growth and contribution as it supports market
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consolidation, customer protection, sustainable portfolio growth and financial access to society.
Apparently, Keerthiratne and Tol, 2018, articulated about key characteristics of Sri Lankan
micro finance market from which it is evaluated that there is a significant gap between access to
savings and access to credit. In accordance with this analysis it is determined that the major
factors which can assist in bridging gap in enabling access to capital for lower income population
of society. The target of MFI in Sri Lanka is nearly of 2.6 million households. The capital access
in country is to raise standard of living of people from low to medium and medium to high.
Apart from this, income classification of customer segments and household in Sri lanka is based
on High, medium, low and lowest income group which where high income group people
are .2mn and middle income group are 1.1 million. However, low income group comprise 2.6
millions households and lowest income group includes 1.1 million households.
Apart from this, Halloluwa, Usoof and Vyas, 2018, discussed about strategies of MFI Sri
Lanka are based on Demand where focus of professionals is on targeting existing base of
customers from small players. Innovation is another focus of micro credit facilitators of Sri
Lanka who aim at implementing life cycle of product by man aging needs of different customers
Thus, it can be argued that micro credit facility is effective for the society of Sri Lanka as it
enables direct financial support with low interest rate (Micro finance sector in Sri Lanka:
Opportunities and growth strategies, 2016). It is the best plan which enables financial support to
needy individual for society which leads to growth and development of economy.
RESEARCH SPECIFICATION
Research Approach: Approach of study helps the investigator in incorporating planned
sequential steps for managing smooth and systematic flow of information and discussion in
research. There are different types of research approaches that is inductive, deductive, etc. Every
approach of study offers different way of managing procedure of project (Lewis, 2015). Like
inductive aim at implication of evidence and theories to support data collection and analysis
where deductive aim at integration of quantifiable measures to derive research outcomes.
However, the dissertation will be based on inductive approach which will helps the scholar in
complying to different sources and evidence for analyzing impact of micro credit on growth of
small business in Sri Lanka.
Research philosophy: It is the phenomenon of set beliefs and plan which are essential of
data gathering and analysis of study. The philosophical research methods helps the scholar in
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determining best of collecting and analyzing research topic according to interest of topic.
Interprtivism and positivism are two type of philosophizes which assist scholar in conducting
study in unique way (Brinkmann, 2014). Like with the help of positivism philosophy the
researcher is able to evaluating topic related to natural phenomenon by evaluating properties and
relations. On th other hand, there is interpretivism philosophy which helps the research is
analyzing topic which are of human interest like aim of present dissertation that is impact of
micro fiance on growth of small business. Therefore, this study will be based on interpretivism
philosophy of which will support qualitative analysis of investigation.
Sampling: It is method of predetermining number of observation from large number of
sources or population. It is used for sorting because it is important for the researcher to chosen
small number of sources to outline relevant information on research aim ad objectives (Flick,
2015). There re wide range of method for sampling like, cluster, random, stratified, probable, etc.
The motive of researcher is to choose source which helps in collecting unbiased research
outcomes. Therefore, in this dissertation scholar will make use of random sampling method
because it reduces the chances of biased selection. The sample of investigation will be 20 poor
entrepreneurs of Sri Lanka who have accessed capital from Micro finance facility.
Data Collection: Gathering information is utmost critical and complex part f research
because it based on reviews of varied sources like primary and secondary. Primary information is
current and fresh and is collected by scholar via interview, focus group, survey, etc. On the other
hand secondary data is based on already available and collected facts by scholar (BNS and HV,
2013). This is gathered via newspaper, governmental publications, articles, blogs, books and
Journals. Every source authentic in its own way and helps scholar in gathering relevant and
reliable information. However, in this research researcher will make use of both methods of
gathering data where secondary information will be articulated form of literature review and
primary information will be collected by interview of 20 sampled poor entrepreneurs of Sri
Lanka. Thus, the interview will be conducted with the help of questionnaire.
Data Analysis: It is the based for outlining results and outcomes of entire research. It is
the complex part of study because in this focus of scholar in on making comparison of
information collected via primary as well as secondary sources. Qualitative and quantitative are
two types of analysis method which are widely used by scholars in different study (Nayar, 2012).
Quantitative analysis offers numerical and mathematical analysis is outlined by statistical tools.
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On the other hand, qualitative analysis is in theoretical and descriptive form which drawn on the
basis of information collected by scholar. In this investigation of impact of micro fiance on
growth of small business of Sri Lanka the researcher will imply use of qualitative analysis where
interview review will be analyzed in form of thematic analysis. Themes will be framed on the
basis of questionnaire and qualitative discussion will be conducted with the help of graphs and
bar diagrams.
Ethical consideration: Adhering to ethics is foremost concern of scholar which it helps
the individual in determining right and wrong of the research. It is necessary for the investigator
to ensure informed consent and compliance with polices of data protection in order to protect
confidentiality of collected information and opinion of participants. The research will seek for
informed and written consent of all 20 randomly sampled participants which will assist in
deriving individual interest in particular research topics. Moreover, the information shred by
respondents will be only used for personal learning and academic purpose.
TIME SCALE
Research
planning
activities
Week
1
Week
2
Week
3
Week
4
Week
5
Week
6
Week
7
Week
8
Selection of
topic
Framing aim
and
objective
Reviewing
literature
Selection of
research
methods
Analysis of
data
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Conclusion
and
recommenda
tion
Feedback
from client
and
necessary
modification
Final
submission
STRUCTURE OF DISSERTATION
 Chapter 1: Introduction: In this chapter focus of investigator is on outlining aim of the
study which is framed from topic of dissertation. It is utmost chapter of dissertation and
act as base for entire study. In this a focus on research in on developing understanding
over all the aspect of aim and objectives. This comprise background of the topic from
where scholar will be analysing importance and needs of microcredit and its role in
economic growth and development of Sri Lanka. Further, it suggests use of keywords and
which will used by researcher for managing smooth and systematic flow of discussion in
entire dissertation.
 Chapter 2: Literature review: This is discussion over secondary sources in which
researcher outlined discussion and review of various articles and, books and journals
related to topic of study. Literature review helps in gaining insight over all facts and
findings over research topics. Like in this chapter scholar will be able to derive need of
managing micro credit facility to support economic growth and development. Further it
will outline benefits of micro finance facilities to poor entrepreneurs of Sri Lanka.
Moreover, it will identify about easy capital access and flow of money to lower income
group of Sri Lanka. The chapter will be based on thematic analysis and therefore will
help scholar in managing systematic discussion.
 Chapter 3 Research Methodology: This is justification of specific procedures and
technique chosen of data collection and analysis of information research aim. This
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chapter of dissertation is based on different methodological tools which are base of entire
study. In this chapter researcher justifies use of certain method chosen for study like
research philosophy, approach, sampling, etc. Justification helps in determining
effectiveness of chosen methods which is necessary to be derived in order to suggest its
effectiveness.
 Chapter 4 Data Analysis: This chapter is based on interpretation and discussion of
primary collected information. In this research will form themes on the basis of
questionnaire which will be critically discussed as per information shared by different
participants. This is a complex chapter as it is based types of opinion and views which
ends to justified by scholar by making comparison. Qualitative and thematic analysis
will a base for this chapter and will help investigator in outlining findings of primary
collected information.
 Chapter 5: Findings and discussion: In this dissertation chapter scholar makes
comparison of primary and secondary collected information. It is utmost important part
of study because it helps on outlining relevant results of research questions. On the basis
of these findings, scholar is able to drive accomplishment of research objectives and
weakness of current study. This chapter is beneficial for academic purpose because it
outlines every information collected and analysed by researcher.
 Chapter 6: Recommendation and conclusion: This is the final chapter of dissertation
where researcher aim at outlining summary of entire dissertation on the basis of chapters.
The conclusion reduces the time of learning entire study because This chapter focuses on
outline of types of facts discussed in study. Further, scholar focus on recommending
some measures of improvement with regard to topic which can b considered in
forthcoming similar studies.
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REFERENCES
Books and Journals
BNS, R. and HV, R., 2013. An overview of interpretive phenomenology as a research
methodology. Nurse Researcher (through 2013). 20(6). p.17.
Brinkmann, S., 2014. Interview. In Encyclopedia of critical psychology (pp. 1008-1010).
Springer New York.
De Mel, S., McKenzie, D. and Woodruff, C., 2012. One-time transfers of cash or capital have
long-lasting effects on microenterprises in Sri Lanka. Science. 335(6071). pp.962-966.
Flick, U., 2015. Introducing research methodology: A beginner's guide to doing a research
project. Sage.
Halloluwa, T., Usoof, H. and Vyas, D., 2018. Sociocultural Practices that Make Microfinance
Work: A Case Study from Sri Lanka. Proceedings of the ACM on Human-Computer
Interaction. 2(CSCW), p.65.
Hansen, N., 2015. The development of psychological capacity for action: The empowering effect
of a microfinance programme on women in Sri Lanka. Journal of Social Issues. 71(3).
pp.597-613.
Keerthiratne, S. and Tol, R.S., 2018. Impact of natural disasters on income inequality in Sri
Lanka. World Development. 105. pp.217-230.
Lewis, S., 2015. Qualitative inquiry and research design: Choosing among five
approaches. Health promotion practice. 16(4). pp.473-475.
Nayar, S., 2012. Grounded theory: A research methodology for occupational science. Journal of
Occupational Science. 19(1). pp.76-82.
Silva, I.D., 2012. Evaluating the impact of microfinance on savings and income in Sri Lanka:
Quasi-experimental approach using propensity score matching. Margin: The Journal of
Applied Economic Research. 6(1). pp.47-74.
Silva, I.D., 2012. Evaluating the impact of microfinance on savings and income in Sri Lanka:
Quasi-experimental approach using propensity score matching. Margin: The Journal of
Applied Economic Research. 6(1). pp.47-74.
Thrikawala, S., 2017. Does Gender Diversity Influence the Operational Sustainability of
Microfinance Institutions (MFIS) In Sri Lanka. Journal of Business and Technology.
p.65.
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Wijesiri, M., Viganò, L. and Meoli, M., 2015. Efficiency of microfinance institutions in Sri
Lanka: a two-stage double bootstrap DEA approach. Economic Modelling. 47. pp.74-
83.
Online
Micro finance sector in Sri Lanka: Opportunities and growth strategies. 2016. [Online].
Available through:
<https://www.microfinancegateway.org/sites/default/files/publication_files/
intellecap_thought_note_sl_mfi_.pdf>.
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