“The idea of microfinance emerged around the 1970s as a revolutionary new way to alleviate poverty in developing countries. Microfinance delivers financial services – such as loans and saving...Show more“The idea of microfinance emerged around the 1970s as a revolutionary new way to alleviate poverty in developing countries. Microfinance delivers financial services – such as loans and saving services – to the poor, who are traditionally financially excluded from conventional financial institutions. However, the debate whether the efforts of MFIs have been successful is almost just as old as the concept itself, and the results remain ambiguous. This thesis aims to add to the extensive body of literature by providing an in-depth comparative case study of the experiences and effects of microfinance institutions (MFIs) in Thailand and Indonesia. The research is focused on poverty alleviation in two key areas, (i.) household income generation and (ii.) household asset building. The hypothesis is that although MFI provides great opportunities for people in lower-income classes to access credit, it has done little to practically alleviate poverty in Thailand and Indonesia. In the final analysis, this thesis will argue that this hypothesis is false, and argues that microfinance institutions in Thailand and Indonesia have been effective in increasing household income and therefore poverty alleviation. However, the effect of microfinance on asset building is ambiguous. Therefore, the study revealed that the effect of microfinance on asset building for poor households should be further studied.” Key words: microfinance; poverty alleviation; Village Fund program; Islamic microfinance; Thailand; Indonesia.Show less
