With the numerous problems that constantly affect main stream banking; the ideal solution has been micro financing. Micro financing is slowly taking the place of investment banking due to its many advantages.
With the numerous problems that constantly affect main stream banking; the ideal solution has been micro financing. Micro financing is slowly taking the place of investment banking due to its many advantages. First, the industry empowers businesses by providing easier financing than the main stream banks, improving the value reflected on the business valuation reports. Despite that, the micro finance industry handles lesser amounts of finance than banks, it has proved to be a one stop shop for most financial solutions that include providing financial services, arranging for mergers and acquisitions, business valuation, equity transfers and many others.
Micro finance has altered the way business financial services have been offered in the past. They have developed better investment banking systems, like bottom up financing that is traditionally used by the banking system to give credit. This change has greatly assisted the businesses that were seen to be un-bankable to being bankable. The system entails giving smaller loans to businesses which increases with the ability to clear the previous debts.
Micro financing targets the small borrowers, thus has removed a big chunk of people who could not access loans from the banks. Due to their target market, the institutions are placed on the ground where they offer almost all financial services, including cash advances, partnerships, education, business management and monitoring, and providing advice on growth and emerging opportunities. Micro finance has played a great role in the empowerment of people and businesses, especially minority groups, by providing investment banking services.
Most of the micro financing firms are local, what this means is that they offer financial services to the locals and for the locals to develop themselves and their economy. It also encourages the members to assist others through giving examples of success in business. This can be termed as promotion of in-country growth. However, there are many international partnerships that have been done by different micro investment banking firms. The partnerships are meant to compare notes on individual case studies on financial services to help in the growth of the business and the economy. This has enabled many businesses to remain operational even during recession and its aftermath.
The other role of micro finance in investment banking is that it has revolutionized the industry to include technology and strategies that were formerly unavailable. Financial services are now available online and can be accessed by anyone at anytime. The change in the way investment banking was done in the past has created competition and countless employment opportunities. Many people today can access loans easily without the burden of providing collateral that is rare to find in many businesses. The micro finance institutions have explored other easier ways to secure loans rather than the insistence of securities such as deeds. For information on the corporate advisory services offered by Madison Street Capital and Charles Botchway, please visit us on line at www.madison streetcapital.com.
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David Bishop is the author of this article on Madison Street Capital.
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Source: http://www.articlesnaps.com/2012/01/05/the-role-of-micro-finance-in-banking/
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