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Small Business Financing (Entr 434) Question Paper

Small Business Financing (Entr 434)

Course:Business Administration

Institution: Kenya Methodist University question papers

Exam Year:2012

TIME: 2 HOURS
Instructions: Answer Question ONE and any other TWO Questions.
Question One
Fundo De Credito Communitario (FCC) is one of the largest microfinance providers in Mozambique, serving more clients than any other institution in the nation. About 85% of its client portfolio is engaged in their community group-lending program. Unfortunately, many intra group delinquencies are occurring, leaving clients to select between one or two costly coping strategies.
First, many non delinquent clients have to use profits or savings to cover the repayments of delinquent group members. This necessarily constrains the net benefits that they are able to realize from borrowing, and may produce clients, in order to avoid – ensuring this cost have resorted to forcefully confiscating the personal possessions of delinquent group members in order to cover their repayments. This leaves the latter clients worse off for having borrowed credits from FCC.
Required:
What is delinquency and what are the mains causes of delinquency as withnessed at FCC?
(10 Marks)
Show the benefits and costs of using the lending model adopted by FCC
(10 Mark)
Suggest strategies that can reduce delinquency among the FCC groups.
(10 Marks)

Question Two
Define the term micro financing?
(5 Marks)
Describe the various essential features of an effective microcredit program.
(10 Marks)
Explain the four principles of Grameen Bank.
(5 Marks)

Question Three
The current financial environment was achieved following some critical reforms in the sector during the 1990s. Describe FIVE such reforms that were carried out.
(10 Marks)

Compare and contrast debt and equity financing.
(10 Marks)

Question Four
Explain why mohammed Yunis is regarded as the father of microcredit.
(10 Marks)
Discuss the various constraints faced by micro entrepreneurs in accessing and managing credit.
(10 Marks)

Question Five
Identify and discuss FIVE of the innovations witnessed as far as financing MSEs is concerned.
(10 Marks)
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Discuss the advantages and disadvantages of regulating financial institutions including, SACCOs and MFIs.
(10 Marks)

Small Business Financing (Entr 434) Question Paper

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