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Sustainable Development Poverty Reduction by Modeling and Simulation in Microfinance

  • Mohammed KaicerEmail author
Conference paper
  • 29 Downloads
Part of the Advances in Intelligent Systems and Computing book series (AISC, volume 1104)

Abstract

In this paper we present some decision making tools for reducing poverty, by microfinance industry, in order to insure a sustainable development in many counties where the poverty is a real challenge. The services offered by the Microfinance Institutions MFIs, especially microcredit, are for the population that has no real substantive safeguards that allow them access to traditional financial services. This lack of safeguards which illustrates a shape of the asymmetric information it generates higher risk products. The MFI offers two types of contracts, individual lending and group lending, characterized by some parameters. The most important are the interest rate and joint liability in group lending. The characteristic of the latter is that each borrower declares reimburse shares of its defaulting partners and the decision to repay depends on the whole group. As for the individual loan, the decision is up to the single borrower. In this paper we present the techniques of modeling and simulation of some optimization problems in microfinance. We will give the fundamental aspects for the design of a financial contract, to minimize the risk of non-repayment linked to the random behavior of micro-borrowers.

Keywords

Sustainable development Mathematical modeling Microfinance Poverty reduction Risk of non repayment Financial inclusion 

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Copyright information

© Springer Nature Switzerland AG 2020

Authors and Affiliations

  1. 1.Informatics, Systems and Optimization LaboratoryIbn Tofail UniversityKenitraMorocco

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