Effect of Policy on Youth Offending Rates

Effect of Policy on Youth Offending Rates Introduction The purpose of this dissertation is to see if the government policy for youth offending has reduced the amount of youth offenders and also if government’s strategies are affective in order to tackle youth offending. Chapter 1 Define youth offending; what are youth offending and what crimes are classified as youth offending and what the major of youth crime activity is taken place. The change of crime in youths before and now. What is youth offending and what policies are used to deal with criminal activity youth offender. What types of crime are considered as offending for youth? What is Youth Offending?, Who Are Youth Offenders? Youth is considered in the criminal justice system a young person or child age from 10-17 as stated by the Youth justice board .A child or young person who breaks the Law and is guilty is classified as a youth offender. Youth crime can consist of different types of criminal actively such as anti- social behaviour, theft, assault and even murder. This is similar to adult crime as breaking the Law is considered as a criminal offence no matter the age. Youth crime can be proven to harm and be dangerous to the community. It could damage the future of the youth by having a life of crime. According to the House office Youth crime â€Å"harms communities, creates a culture of fear and damages the lives of some of our most vulnerable young people† (www.homeoffice.gov.uk) .The impact of youth crime has caused a disturbance within society which has resulted in policies changing quite often in order to overcome youth crime. Out of the youth justice system young could be a different margin for example from seventeen to twenty-one in general terms is classified as young In many countries crime committed by young people and children has become a major battle of politicians. Many politicians believe that youth offenders should be prepared to receive the punishment for the crime they have committed. According to (Simon,2000) â€Å" politicians across the political spectrum have demanded that if a young offenders are prepared to ‘do the crime’ they should also be prepared to ‘do the time’ and that in some cases they should do this ‘time in the same place as adults† (Pitts,J. (2003).) The government have become aware of youth offending and are taking it much more seriously the previously. Punishment has been considered is the main way youths should suffer the same as adults for the actions. Young people and crime have many similarities with the adult offenders. Both adult and youth may have a balance between â€Å"punishment, rehabilitation and deterrence and that between the rights and responsibilities (including the victims) of offender†. ( Pitts,J. (2003). p71) there are different types of sentences from discharges to custody and fines depending on the offence. The England and Wales criminal justice system identifies young people aged between ten and seventeen are classified as youth and are dealt with in a different justice system which is called the youth justice system. Youth offenders have its â€Å"own courts, custodial institutions, professional personnel and in many cases sentences† ( Kirton, D. (2005)) This has become the main part in the youth justice system as children and young people’s mentality and understanding are different to adults so therefore children and young people may not be fully aware and fully at fault for the offence. Youth justice system is a system created so treatment is the main priority of young people and children who are suffering from welfare and other problems as educational, poverty and drugs etc. The youth justice system would consider that the evidence regarding the youth offender and decided what is the best punishment or treatment need which is going to benefit the youth. This is done mainly to prevent the youth from offending again by tackling the problems before it could mean the youth is less likely to offend again. Some organisations consider twenty one year olds or even up to twenty five or thirty as young but according to the youth justice system over seventeen years of age is considered full responsible for the offence so the criminal justice system would deal with the case of over seventeen people. The youth justice believe that youths aged from ten to seventeen are not in the full state of mind compared to an adult for example if a ten year old was to kill someone they would not be liable for a first degree murder due to they cannot distinguish between right and wrong. some groups believe that youths who commit a offence should have the same punishments as adults and others believe that youths at ages from ten to seventeen cannot full be responsible for the action (Jamie bugler case two ten years old killed a child younger then them) Youth policies in the justice system regarding youth offending are mainly set by the government which have installed the youth justice board during the years of 1998 and 1999. Policies were set before by the government and still are mainly but the youth justice board is there to make sure organisations who are trying to prevent youth offending are doing their jobs. Policies such as the Crime and Disorder act in 1998 which was a policy set by the government to create multi-agency panels in order to achieve effectiveness and efficiency. Standards had to be achieved as it was consider as the biggest â€Å"shake up† in the youth justice system according to â€Å"Jack straw† (Pitts,J. (2003). P88). Policies could benefit for and against for example policies regarding social, economical, health and welfare were seen as the main policies for organisations who worked for youth offenders to apply such as the Treatment of youth offenders. Then policies regarding tougher punishments were put in to action now a more multi-agency with treatment and also punishment depending on evidence policy is present. Were it would be considered by a panel which would decided what would be the best method for the youth offender not to re-offend. The main policies regarding youth offenders are introduced by the government s rules and regulations for youth organisations, new legislations and Laws. The youth justice system was introduced policies in force were changing quite often as punishment was the main type of sentence but due to children and adults having their differences (mental, economical, knowledge). Duty of care for children and young people should be considered as from research according to Derek Kirton it could be said that many youth offenders suffer from poor welfare, economical issues, family, health and educational problems. Accoutring to the Home office statistics levels of youth offenders you have these problems are quite high. Punishment may not be considered the best method to help youths in welfare problems. As a result of this future policies changed in order to prevent youth offending by offering treatment instead of punishment. Policies may change depending on research and results as improvement may not be visible. The youth justice system is a system that is created to deal with young people who have offended as it is believed that the young should be treated differently for the offence as young people are not fully aware and knowledgeable as an adult. This system was first introduced in the nineteenth century as pressure from groups by the media, religious, and welfare believed that children are less aware of the offences they commit then an adult. Before the youth justice system was developed young people and children were no different to adults as youths would also be sentenced to the adult jail. After a short period of time when there was no differences for youths and adults, â€Å"industrial schools were introduced for seven to fourteen year olds convicted of vagrancy†( Pitts,J 2003).) as â€Å"Newborn 1995 † stated .these industrial schools were to keep youths out of adult prisons due to the level of corruption and brutality in the adult prisons. Youths and children would stay in the industrial school like it was a jail just for young people and children. The system for youths started to change even more as industrial schools started to expand and more children and young people were held there. As a result of this pressures from political groups due to the increasing level of crimes among youths was getting out of control and media and many off the public became aware of this. â€Å"Informal social controls and the drunkenness, vice, violence and crime to which gave rise† (Pitts,J 2003). It became a major scare as many believed that the justice system and other groups cannot control this crisis. As this crisis was mainly for social controls the media, police and politicians main priority was to control and to remove the crisis. As the level of crime was rising the method of the industrial schools should how unstable the policies and strategies were. it shows that the strategies and the policies of punishment is clearly not working as crime is escalating . During this time punishment was tough unlike today where children and young people have they own justice system and are not as tough on punishment as it was around two centuries ago. Then youths and children were punished similar as how adults were .The social controls were out of hand and it was decided by the government to create committees which would concentrate on the â€Å"treatment† (Pitts,J 2003)of the youth offender instead of punishment. The government created two committees which were â€Å"Gladstone committee and the Lushingto committee† (Pitts,J 2003) these committees were created to be less–tough on youths offenders as they believed that treatment instead of punishment would reduce crime. This may perhaps be that what the government wants to do deal with the problem before it occurs for example a child or young person may offend due to problems at home or even educational problems as a result the committees would try to help children or young people over come this problem as if not treated then a youth may be in a condition where they are not fully aware of offending (need example to back me up) custody was also introduced by the government as the offender could be confined. Treatment was also only offered if there was enough evidence to support the fact that the child was affected by any of the following sciences consisting of paediatrics, child psychology, criminology and penology. This was a newer form of youth justice introduced by the youth justice system, but responsibility was held by the juvenile courts according to (Pitts,J 2003). Chapter 2 Historical context of youth offending, what were the previous strategies and how were they implemented? What are the current strategies (ones that are used now) and what strategies are being considered for the future. What are the objectives of the strategies? The Youth Justice System. What it is, how it is used, the benefits and the weakness of the system. What are the objectives of the governments youth justice strategies. What objectives have been achieved and what are the aims of the government to achieve the target. Have the government met the objectives if so how The aim of the youth justice system is to reduce this major problem of youth crime by building safer communities and to tackle the problem of social exclusion (Home Office, 2008). Social exclusion has led individuals and groups to suffer as it has partitioned them to participate with society activities due to their socioeconomic factors. Chapter 3 What and How effective are the current strategies in place to deal with youth offenders.figures that show Yots etc are working , Talk about organisations such Yots, parenting schemes and other methods used by the government .. The positives and negatives, such as cost etc. what they are doing to try and achieve their aim. Talk about some youth programmes set up in order to reduce crime. Yots mainly but look at other services . In order to tackle youth crime the government introduced the Crime and Disorder Act 1998 where Youth Offending Teams (YOTs) where introduced. These teams are multi-agency bodies with the primary aim of preventing offending by children and young people†. Their aim is also to prevent young people from re-offending in which support is given to them by the YOTs (Bateman et al, 2005). One of the areas covered by youth offending teams is to tackle anti-social behaviour which includes â€Å"harassment of residents or passers-by verbal abuse, criminal damage, vandalism, noise nuisance, graffiti, engaging in threatening behaviour in, large groups, smoking or drinking alcohol under age, substance misuse, joy-riding, begging, prostitution, kerb-crawling, throwing missiles, assault† and â€Å"vehicle-related nuisance† (YJB, 2005 pg 5). The old youth justice, proved by the Audit Commission (1996) caused high levels of crime such as â€Å"vandalism†, â€Å"thefts and burglaries†. This system was confirmed to be â€Å"inefficient and expensive† as it resulted to a little being done to tackle youth crime and showed high levels of re-offending. The Audit Commission in 1996 established a report ‘Misspent Youth’ where many recommendations were highlighted for the new youth justice (Goldson, 2000). The key recommendation in the report was to carry out â€Å"intervening† with youth in the early stages of their career so that their offending behaviour can be targeted. The White Paper ‘No More Excuses’ also stated that YOTs will need to, â€Å"Deliver community intervention programmes to make youngsters face up to the consequences of their crimes and learn to change the habits and attitudes which lead them into offending and anti-social behaviour. The programmes might adopt techniques such as: group work; family group conferencing and mentoring† (Home Office, 1997) Chapter 4 Is the emphasis tough on crime or tough on comers of crime? Look at the punishment and sentencing, public perception look at differences like police want tougher laws on youths but social workers think education and rehabilitation programmes are better .look at the Hansard arguments and news articles to see. How effective are the current strategies in place. Are they reducing the level of crime among youths? Are there different punishments for youths? Level of youths reoffending. Look in to Suggestions instead of punishments Chapter 5 Which interest groups are involved in creating youth offending policies, look at statistics from 2002/03and 2006/07 and compare the data see if the rates are falling etc and which crimes where low and high. Argue for and against punishment and prevention and punishment and rehabilitation. See in the results if punishment becoming harsher is better than the welfare state before and what is happing now such as Multi –Agencies. Also look at which types of youth offend and reoffend the reasons behind this. The statistics from 2002/03 compared with 2006/07. What is found and where should the YJS change and forces on etc. The main aim of the Criminal Justice System (CJS) is to prevent crime, â€Å"the police alone have been relatively ineffective agents of crime prevention† due to crime being a â€Å"multi-faceted in both its causes and effects† (Bateman, 2007). Multi-agency is a process that the Audit Commission believed would play a vital role to divert young people from the courts and prevent them from re-offending in which programmes set up by the Youth Offending Teams which will help them to change and also to face up to the harm caused due to their behaviour (Goldson, 2000). Local authorities (LA) gained a huge statutory responsibility in which they had to implement a multi-agency response to youth crime; previously it had been up to the LA to determine how they did so. The Crime and Disorder Act (CDA) â€Å"required all local authorities with social services and education responsibilities to replace social services youth justice team† (Burnett, 2005 pg 106) with Youth Offending teams. Each team consisted of â€Å"representatives from the local probation and police services, health, education and social services† (Burnett, 2005 pg 106). 14 pilot Youth Inclusion and Support Panels (YISPs) were set up in April 2003 by the Youth Justice Board. This was to target those who were likely to be at the risk of offending, the age range targeted was 8-13 year olds (Youth Justice Board, 2003). The Youth Justice Board (YJB) was first established in 1998 by the Labour Government in which their focus was on the Youth Justice System. YOTs are monitored by the YJB where their performance is measured and aims and objectives are given to them resulting to broad range of expectations that YOTs are supposed to fulfil hence a need for a broad range of expertise within the teams. It is essential for YOTs to develop â€Å"efficient administration of justice† so that when a young person breaks the law; their case is handled and dealt effectively and efficiently. It is vital for the offender to take responsibility for their offence so therefore the YOTs aim is to confront the individual in an appropriate manner so that effective communication is implemented. This will enable them to intervene with one another and discuss factors which causes the individual at a risk of offending. Punishment must be given to the offender which is proportionate to the seriousness of their crime and encouraging reparation to the victims by the offender. Parent responsibilities are also taken account of by the YOT’s and are reinforced. YOTs work with a range of services and interventions such as, â€Å"housing authorities, social services, housing providers and voluntary groups† (http://www.yjb.gov.uk ). The YJB sets out corporate targets for YOTs annually. The corporate objectives for 2006/07 to 2008/09 are divided into 3 sections: Reduce offending and the use of custody Support the youth justice system to reduce the number of first-time entrants to the youth justice system by 5% by March 2008 compared to the March 2005 baseline. Support the youth justice system to protect victims and communities by reducing re-offending by young offenders by 5% by March 2008 compared with the 2002/03 baseline, working towards a 10% reduction by the end of the decade. Support the youth justice system to, between 31 March 2005 and 31 March 2008, reduce the size of the under-18 custodial population by 10% through the implementation of the minimising the use of custody work programme. Improve outcomes for children and young people Support the youth justice system to improve the assessment of risk and need for young people who have offended, and improve their access to specialist and mainstream services that will address the factors identified. To ensure that YOTs have action plans in place to achieve equal treatment at local level for comparable offences by different ethnic groups and to deliver targeted prevention activity that substantially reduces local differences by ethnicity in recorded conviction rates, by March 2008. Safe and appropriate use of custody To ensure that all girls under 18 years of age who are remanded or sentenced to custody are accommodated in secure establishments that are separate from adults by October 2006, and replace 250 places for boys in shared adult sites with separate facilities by March 2008. (source: YJB, 2005 pg 6) These aims will help the members in the youth offending team to stay focus on the targets and will direct them to meet them, they are also able to carry out an effective service by â€Å"monitoring the treatment of young offenders and reducing inequalities†, â€Å"improving access to mainstream services† which will help to â€Å"increase confidence in the youth justice system† (YJB, 2005 pg 6). There are key aims that Rose Burnett has identified that underpin Youth Offending Teams that focus on preventing offending and effective practice is made easier by a multi-agency approach, that can respond to young people in an holistic fashion. â€Å"Youth justice workers should join forces with other professionals† this explored the argument regarding young people being related to problems such as â€Å"truancy, drug abuse and family breakdown† each being handled by â€Å"separate agencies† (Burnett, 2005 pg107). Due to YOTs this would prevent a â€Å"duplication of effort, inconsistencies and differences in emphasis† if the team worked effectively together tackling these problems (Burnett, 2005 pg107). â€Å"All parties should share the aim of preventing offending† as over time the approaches to the youth justice have altered which has caused a lot of confusion regarding the purpose and function of the youth justice system. The government established the paper â€Å"No More Excuses† in which they have stated their â€Å"intention to break with the previous culture of youth justice† where young people’s offending was exempt due to a concentration being on their â€Å"needs rather than their deeds† (Burnett, 2005 pg 107). The paper clearly identified the aims of â€Å"reducing crime by young people† which were given to the members of the Youth Offending Team (Burnett, 2005 pg 107). YOT’s work in partnership who works in conjunction with all other departments in order to achieve the aims set out. The youth offending teams work in a range of services such as, courts and the prison services, they are also involved in complementary inter-agency initiatives, such as child protection committees and community safety partnerships. The goal is to provide a â€Å"joined up†, corporate approach to preventing youth offending. Both the Government and the youth justice board emphasised that YOT’s were not intended to belong to any of the individual agencies. This is a partnership approach which is between all the parties (Burnett, 2005). There are many advantages of multi-agency working within a Youth Offending Team alongside disadvantages which cause areas of concern and which will have to be taken account of. To begin with the advantages of multi- agency working, by working within a Youth Offending Team will result to knowledge and skills being shared. Each member of the team will provide one another with the required information on an â€Å"informal, ad hoc basis† therefore there will be no need for them to â€Å"write off for information or wait for a return phone call† (Burnett, 2005 pg 109). This saves time and communication will be more effective and efficient. By working in the same office was believed to be a great advantage due to a quick access to information and advice (Burnett, 2004). A holistic approach is achieved due to all the representatives of â€Å"all the relevant disciplines† being under â€Å"one room† (Bateman et al, 2005 pg 109). If however, cases do arise which â€Å"lay outside the expertise of the responsible officer† then there is usually someone with the required â€Å"experience, â€Å"knowledge† and skills in the particular area to handle the problem and also recommend suggestions (Burnett, 2005 pg 109). This therefore portrays that multi-agency teams appear to be very beneficial as they bring together â€Å"seamless youth justice service closer† (Burnett, 2005 pg 109). The â€Å"availability of representatives from different services facilitate the referral of young people to those services† (Burnett, 2005 pg 109. This reduces lengthy waiting lists and also â€Å"complicated referral procedures† that are likely to occur. Opportunities of â€Å"having the right person in the right place at the right time† (Burnett, 2005 pg 109) are increased which is hassle free and more convenient for individuals. For instance young people who offend and get into trouble, frequently may have mental health problems for this reason having a health worker in the Youth Offending Team, who is an employee of Children and Adolescent mental health services would improve the access of YOT kids to such mainstream services. The same theory can be applied with education and children out of school. This illustrates that multi-agency teams are well placed to reintegrate socially excluded young people into mainstream provision. Focusing on the disadvantages of multi-agency working shows that, a YOT consists of people from different occupational backgrounds; therefore, this may cause cultural differences especially in the process of decision making and may result to conflicts and misunderstandings between the staff. This will have a negative impact upon the service of the YOT and cause implications for effective practice. Each member of the Youth Offending Team is recognised as a team and not an individual therefore when problems do arise there will be a high risk on the group as a whole for example on effective communication amongst the individuals. Looking at recent statistics the â€Å"Let’s Talk about It† report states â€Å"for youth Offending Teams to work effectively, there needs to be effective joint working across specialities†, 15% of the YOTs consisted of problems due to joint working between the specialist health and substance misuse workers and case managers. The reason for these problems was due to â€Å"the lack of adequate procedures for the sharing of information that affected many Youth Offending Teams† (Healthcare Commission, 2006). The multi-agency members may be part of one team but may receive different conditions to their service. For instance the â€Å"operational managers might receive lower salaries than some of the practitioners under their supervision† (Burnett, 2005 pg 109), this shows that conflicts may arise between the staff regarding different rewards being attained. This is also explored by Sampson et al (1988) where it can be seen that the police are often more dominating which results to them ignoring the multi agency team which may cause conflicts among the members of the team and shows how tensions between partners with different priorities can arise. â€Å"The police are often enthusiastic proponents of the multi-agency approach but they tend to prefer to set the agendas and to dominate forum meetings and then to ignore the multi-agency framework when it suits their own needs† (Sampson et al, 1998). There has been a debate whether the team members in a Youth Offending Team should be generalist or specialists. Research carried out on behalf of the YJB found out that, in practice â€Å"many specialist health, education and substance misuse staff are under pressure to undertake generic youth justice duties†. This shows an ongoing â€Å"difficulty of obtaining specialist services from outside of the YOT and contributes to a dilution of specialist provision within it† (Pitcher et al, 2004). A Youth Offending Team consists of members from different occupations for example a â€Å"police officer† or an â€Å"education worker† (Burnett, 2005 pg 109), by working in a YOT the members may lose their real identity and profession and for this reason they may not be able to bring their â€Å"distinctive professional contribution† into the YOT. There is a problem about generic versus specialist work, this looks at whether members in the YOT do a bit of everything or do work relating to their specialism therefore causes identity confusion. The work of multi-agency partnerships sounds good but the main question is does it work once it’s put in practice? Data from the ‘Agency Public Protection Arrangements Annual Report 2005/06’ (pg 21) shows five years on from the implementation of the Criminal Justice and Courts’ Services Act 2000 which established the Multi-Agency Public Protection Arrangements, also known as MAPPA. Within the five years (2001-2006) multi-agency partnerships have gained an achievement on employing a safer society for all however there is still a lot for them to do and to ensure that â€Å"arrangements are fit for their purpose and are applied across England and Wales†. The main aim of the MAPPA is to make the â€Å"communities safer and reducing re-offending† (National Offender Management Service, 2005/6 pg 21). Multi-agency is something which was created by the government in order for public services could work together to reduce costs, crime and create a more organised justice system. multi agency is the way forward according to the government who believe authorities such as police, social workers , welfare and Yots will work together this is to have a better understanding of the situation and there for make a more accurate decision. Punishment, prevention and rehabilitation issues would descused regarding the youth offender. It would depend on the crime, social wellbeing, education, poverty etc. Although research shows that multi agency partnership works but there are also many areas and cases created that should be looked into for improvement. This can be seen through the case of Victoria Climbie which took place in February, 2000. Victoria aged eight was living with her aunt Marie-Therese and her aunt’s boy friend Carl Manning in London. Victoria’s parents had sent her with her aunt due them believing she would gain a better future but instead she was suffering abuse by Carl Manning that led to her death. Inquiries after her death took place by Lord Laming which showed that multi-agency partnerships are partly responsible for the death due to the doctors, police and social workers being aware of the situation which could have been tackled and could have saved a life but instead there was a lack of communication amongst the multi-agency’s which caused them to be under the assumption that another agency had taken control of the case. For this reason Victoria was unable to gain the support and treatment that she required. This case allowed the work of multi-agency partnerships to be looked into to point out the areas of concern that had to be developed upon. One of the major concerns was the lack of staff. New approaches were introduced regarding children which is evident in the Green paper in 2003 where there government established ‘Every child matters’ that enabled children to retrieve a better and healthier life, it also addressed many changes to the work of multi-agency partnerships work such as data being accessed by all members in the agencies and recorded accurately, finance was also given ( £100,000) in order for them to develop upon sharing information between each profession. Children were also give more rights in which they were able to contact more than one service at anytime and there was also a need for assessments to be carried out which would require multi-agency teams to share data. These points will enable each member of the team to work more effectively alongside one another (www.community-care.co.uk). Another problem that has encountered can be seen through a recent report called â€Å"Let’s talk about it† by the Healthcare commission (2006) which shows that there is a problem with health and education not meeting standards. The report shows that â€Å"children and young people who offend have more health needs than the non-offending population of childrenThe provision of healthcare for them has improved, but it remains inadequate†. Therefore the healthcare organisations are required to contribute to youth justice in their area in order to reduce the factors that play a part in offending. The report portrays findings from 50 Youth Offending Teams in England and Wales carried out from September 2003 to April 2006. The findings illustrate that services should be made more accessible for children aged 16 and 17 as this is the age where individuals are likely to carry out serious crimes. Healthcare workers within the multi-agency partnerships provided services for the offender based on their â€Å"experience† and â€Å"specialities† rather than the needs of the individual which can have a positive and a negative response. Data shows that from â€Å"2004 onwards, CDRPs required to undertake an annual appraisal of their health. To be changed to 6 months following a review†, however out of the â€Å"20 projects studied over 18 months: 4 had completed, 6 still aiming to implement plans, 6 had abandoned some of their plans and 4 had made very little progress† (Hedderman e

Changing Roles of Managers at Corporate Insurance Essay -- business, m

Over the course of the past two years, I have worked in a call center environment within the Corporate Insurance Company. A typical day is fast paced, yet structured. Up until recently, I had the responsibility of taking anywhere from 70 – 100 inbound calls daily from either troubled agents or inquiring customers. Of these calls, a few are monitored on a monthly basis to ensure the accuracy of the information that I am giving out. Customer service representatives here are also held accountable for our time on and off the phone as well as any data entry or what we call â€Å"after call work†. Again, this job family has operated with full structure and accountability. One of the repeated issues facing all phone counselors in this job family is the changing of the roles of managers. This is due in part to Corporate being a growing Fortune 500 company. Lately, about every four to six months, there has been a need for restructuring and reassigning of managers and team mates. We strive to work cooperatively as a team and just as we begin to effectively motivate one another, things change. Personally, in two years I have had five different managers and three different teams. Each manager has their own management, leadership and coaching styles and within each team there are ever changing inter and intra-personal dynamics. As I eluded, I have also changed job families and again, have had to become accustomed to a new manager, as well as the inter workings of a new job family all together. I now work diligently as an Account Processor, processing 70 – 100 policy changes daily. In this role, there is greater flexibility, less structure, and less support. However, the responsibility to provide the best service for the customer has no... ...ze our natural talent, and bring this out. They also have the skill to put their self in the shoes of those they manage. This will help them understand what employees are like and what motivates them, and then they can slowly work to mold them and help them to do their best. Those are some of the primary differences between leadership and management. I’m the type of leader or manager who would lead by example. As a leader I would eliminate potential barriers my employees couldn’t see. Also I would expand my vision with the insight of others, and this would potentially create a better vision and end result. As a manager, I would delegate work to my employees, so they felt as though they were apart of the big picture. Also I would get to know each of my team members, both personally and professionally. All in all I think I would do just fine as a leader or manager.

Complicating the situation further

The proposed solution will be useful to agricultural enterprises because it will enhance the level of efficiency in cost control. The organization presented in the case study produces two commodities: corn and soybeans.Additionally, the equipment used is shared between two parties. Complicating the situation further is that the ownership of the farm is distributed among several parties. Therefore the establishment of cost and profit centers is a must for correctly assessing the level of costs and earnings.Currently the management focus is on production. However the management intent is to shift greater focus to implementing a managerial accounting system that will correctly allocate costs and assign the level of profits proportionally.In this respect, implementation of activity based costing is the best solution inasmuch as it facilitates the identification of allocation criteria based upon which costs and profits can be assigned.The advantage of using the managerial accounting syste m mentioned above is that the management can exercise its own discretion about how to allocate costs between different processes and commodities.Unlike the financial statements prepared under the strict scrutiny of the GAAP, internal reports generated by the managerial accounting system mentioned above do not have to follow any hard and fast rules. As a result the management can customize the system to the specific characteristics of its own business.This customizability is one of the most important features in favor of implementing an activity based costing system. The customizability enables the management not only to assign costs to different processes and commodities based upon resources consumed but also to enhance the level of process efficiency.For example, the proposed solution for the organization in the case study enables John and Mary Farmer to allocate costs to the equipment based upon their level of usage in producing different commodities. As a result, the cost driver is this case is identified as the two commodities. The cost of production for each of the commodities is calculated accordingly.The advantage from using this system is that the overhead is allocated in proportion to the level of resources expended in producing each commodity. This strengthens the quality of the cost structure. The result is that the management is in a much better position to measure performance and formulate strategies accordingly.As illustrated in the case, John and Mary Farmer are going to have to collect a considerable level of information in order to implement an activity based costing system.Therefore in conducting a cost benefit analysis of implementing the managerial accounting system, the cost of collecting the information will have to be taken into account. Additional costs will be incurred by the maintenance of the information system which will have to be supported by expensive hardware and software requirements.These are some of the drawbacks that agricul tural enterprises can run up against when implementing the proposed solution. However these drawbacks must be the weighed against the benefits of more cost-efficient strategy formulation.Question 2If the Farm Council Case did not use activity based costing, then it would not be in a position to correctly assess the cost of producing each commodity. As a result some costs would be overstated and some understated. This would distort profit comparisons between the two commodities. Consequently, any future investment decisions would be distorted as well.The traditional cost allocation method would be particularly harmful in the Farm Council case because the resources being used belong to several different parties. For this reason it is particularly important for the management to use the activity based costing method in order to allocate costs based on the level of consumption.Although the costs of implementing an advanced managerial accounting system would be high, the long term benefi ts of more effective strategy formulation outweigh the costs. Such would not be the case when implementing the traditional cost allocation method.According to the traditional cost allocation method, product costs are calculated according to the number of units produced. As a result, this method does not take into account the level of resources expended in producing these units.This cost distortion is particularly pronounced in the Farm Council Case because the same level of production for two different commodities necessitates different levels of resource consumption.If John and Mary were to use the traditional cost allocation method, then these differences would not be taken into account and the unit costs that would be calculated would be incorrect. As a result, they would not be in a position to make decisions about which product line to invest in more.Currently the focus at the farm was on production rather than on cost control. Therefore, the traditional cost allocation method seemed to satisfy the requirements. However there were massive pools of overhead that were being improperly assigned. These errors in the costing system would be perpetuated under the traditional cost allocation system.The problem with the alternative solution was that the identification of resource drivers for support and production cost centers would be difficult. This would complicate the process of assigning costs.The support cost centers in terms of equipment, shop & maintenance, and general farm would have to be defined in terms of the activities involved. Otherwise it would not be possible to assess the level of resources consumed by each of the cost centers. Therefore the unit costs for different commodities would not reflect the true expenditures and the management would be stuck with a costing system that would be misleading.Commodities which consumed a lower level of resources would have unit costs overstated and vice versa. The reason why this would happen under the alte rnative solution is that the costs would be divided equally between different cost centers based on production volume. As a result, the alternative solution is not recommended.ReferencesAtkinson, Anthony A., et al. (2006) Management Accounting. McGraw Hill/Irwin.

The Role And Impact Of Micro Finance Institutions - Free Essay Example

Sample details Pages: 24 Words: 7066 Downloads: 10 Date added: 2017/06/26 Category Statistics Essay Did you like this example? INTRODUCTION The strong economic growth is bound to create employment opportunities and therefore it will reduce unemployment. The evidence provided by the Labor Force Survey 2005 (First two quarters) clearly supports the fact that economic growth has created employment opportunities. Since 2003-04 and until the last half of 2005-06, 5.82 million new jobs have been created as against an average job creation of 1.0-1.2 million per annum. Don’t waste time! Our writers will create an original "The Role And Impact Of Micro Finance Institutions" essay for you Create order Consequently, unemployment rate which stood at 8.3 percent in 2001-2002 declined to 7.7 percent in 2003-04 and stood at 6.5 percent during July-December 2005.The rising pace of job creation is bound to increase the income levels of the people. Agriculture, housing and construction, IT and telecom sector, and SME are the sectors, which have created relatively more jobs. The estimation of poverty line enables the policy makers to further identify and group the population into various à ¢Ã¢â€š ¬Ã‹Å"poverty bandsà ¢Ã¢â€š ¬Ã¢â€ž ¢ such as extremely poor, vulnerable and non-poor etc. The current growth rates however need to be strengthened to arrest the current growth in poverty levels. Macro stabilization, governance reforms and re-profiling of external debt stock have created prospects for growth in future. The government has indicated its willingness to speed up the pace of structural reforms to meet the major challenges of: Reducing poverty, Improving governance and administration, Improving the fiscal and balance of payments positions, Restoring investor confidence, Achieving higher growth on a sustainable basis, and Improving social indicators. 1.1 MICROFINANCE SECTOR Microfinance in Pakistan is relatively a new concept as compared to other countries in the region. The NGOs and Rural Support Programs has been the major player in the sector since early 1980s covering about 5% of more than 6.5 million poor households in the country. Recognizing microfinance as an important poverty alleviation tool, the Federal Government has adopted a microfinance policy that mainstreams the concept of sustainable microfinance, recognizes the private sectorà ¢Ã¢â€š ¬Ã¢â€ž ¢s role in poverty reduction and encourages its entry into banking with the poor. It has enacted a legal framework, the MFIs (Micro Financing Intermediaries) Ordinance 2001, for establishing Microfinance Banks in private sector and also facilitated establishment of Khushhali Bank, a public private partnership, with twin objective of substantially increasing outreach of microfinance services in the medium term and giving a model institution to the private sector to follow. The MFIs Ordinance 2001 inter alia stipulates the functions, capital requirements, ownership structure, terms and conditions for establishing Microfinance Banks/Institutions in the country, audit and disclosure requirements and winding up procedures. The provisions of the ordinance are applicable on microfinance institutions mobilizing savings from public to finance their operations. The operations of NGOs and other programs providing micro credit and allied services through sources other than public deposits/savings are not covered under the ordinance. The framework allows establishment of three categories of formal microfinance banks in the country via: Nation wide MFBs minimum paid-up capital of Rs.500 million Province wide MFBs minimum paid-up capital of Rs.250 million and District wide MFBs minimum paid-up capital of Rs.100 million 1.2 EVOLUTION OF MICROFINANCE IN PAKISTAN The microfinance movement in Pakistan followed a unique evolutionary path over the last decades. The proceeding paragraphs present the three development phases of the sector. Each phase represents entry of new institutional forms and structures in the Pakistani microfinance sector. Some of the highlights of this 30 year old history are as follow: Phase-1: 1970s, Government directed credit. The use of finance (mostly credit) as a development tool has a history in Pakistan in the form of government directed/subsidized credit schemes particularly in rural areas. In recent years Small Business Finance Corporation (SBFC), Youth Investment Promotion Society (YIPS), Self Employment Scheme (SES) and Yellow Cab Scheme are typical examples. While SBFC and YIPS represent a direct institutional intervention through use of public funds and institutional structures, SES and Yellow Cab schemes represent indirect government pressures on financial institutions, both public and private; to engage in politically motivated directed credit. In the last two initiatives, the government literally forced commercial financial institutions (mostly public sector) to provide concessionary financing especially to unemployed youth and business start-ups. The loan defaults associated with these schemes affecting the financial institutions profitability has been extensively reported in the popular press. Phase 2: early 1980à ¢Ã¢â€š ¬Ã¢â€ž ¢s to mid 1990à ¢Ã¢â€š ¬Ã¢â€ž ¢s philanthropy of finance. The emergence of the Pakistani microfinance sector is usually traced to two pioneering development institutions The Aga Khan Rural Support Program (AKRSP) and the Orangi Pilot Project (OPP). The early pioneers was established in 1982 by the Aga Khan Foundation (https:// www.akdn.org/), AKRSP was the first Integrated Rural Development Program of its kind, outside the government domain. It has focused its development interventions on the Northern Areas of Pakistan. The later day Rural Support Programs (RSPs), initiated by the government, were inspired by the AKRSP model of rural development. The first large scale practical implementation and conceptualization of development frameworks such as à ¢Ã¢â€š ¬Ã…“social mobilizationà ¢Ã¢â€š ¬? and à ¢Ã¢â€š ¬Ã…“group lending methodologyà ¢Ã¢â€š ¬? can be traced to AKRSPà ¢Ã¢â€š ¬Ã¢â€ž ¢s microfinance model initiated in 1982. While AKRSP pioneered development service provision in the rural, agrarian frontiers of north Pakistan, OPP took up the challenge of tackling urban poverty in the biggest slum settlement in Pakistanà ¢Ã¢â€š ¬Ã¢â€ž ¢s port city and commercial capital Karachi. OPP was established by Akhtar Hameed Khan, considered to be the father of rural development in Pakistan. OPP was established in 1987 and its development services include housing, sanitation and education. The RSP model, AKRSP formulated and implemented integrated development approach whereby rural population was organized into Village Organizations (VOs) and the needs prioritized by these community organizations were provided for through a broad range of development services such as education, health, sanitation as well as financial services (microfinance). AKRSP endeavored to develop human, social and financial capital of the communities it worked with. This integrated approach was replicated by government initiated development organizations called Rural Support Programs (RSPs). By 2004, RSPs were working with more than 43,000 community organizations comprising of more than 1,000,000 households. Sarhad Rural Support Program (SRSP) was the first RSP to be established in 1989 as a replication of AKRSP model in the North-West Frontier Province of Pakistan. In the same year a Pak German development project was restructured as an RSP and renamed as Balochistan Rural Support Program (BRSP). Later on Punjab Rural Support Program (PRSP) was also launched by the Government of the Punjab province. The establishment of National Rural Support Program (NRSP) (www.nrsp.org.pk) in 1992 has a special significance. While SRSP and BRSP had provincial focus, NRSP was meant to be the largest national RSP with development interventions including a very ambitious microfinance program all over Pakistan. The rural focused microfinance operations of NRSP have expanded into urban areas as well under its Urban Poverty Alleviation Program (UPAP). With the above mentioned perspective, the microfinance strategy during the early 1990à ¢Ã¢â€š ¬Ã¢â€ž ¢s has certain common elements; the word à ¢Ã¢â€š ¬Ã…“micro credità ¢Ã¢â€š ¬? was used instead of microfinance symbolizing provision of only loans (and compulsory savings) as a social service equivalent to other development needs such as education, health, sanitation etc. Microfinance best practices as we know them today were still in their formative stages and had not crystallized into a coherent set of principles and frameworks even at the international level. Phase-3: late 1990à ¢Ã¢â€š ¬Ã¢â€ž ¢s till the present entry of the specialist MFI. The later part of 1990à ¢Ã¢â€š ¬Ã¢â€ž ¢s saw the entry of regulated financial institutions such as commercial banks and leasing companies in the microfinance arena. Mostly urban based microfinance only programs also came up in major cities of Pakistan. Regulatory structures started taking shape, spawning a new microfinance institutional structure The Microfinance Bank (MFB). 1.3 VIABILITY OF PROPOSED MICROFINANCING BANK (MFB) IN THE COUNTRY In the light of the above scenario the establishment of the proposed micro financing bank (MFB) in the country raises many doubts about its effectiveness to reduce poverty, sustainability to survive in the long run, and opportunity cost of resources diverted from other potential projects towards the MFB. The banking sector in the country has a long history of poor targeting and high default rate in the economy. The past experience of cooperative societies in the country is also that of a disaster. Million of rupees were lost in these schemes on the name of credit. Mainly their borrowers as well as defaulters are from the high-income group and influentials in the society. An evaluation of the pilot project for micro financing of the National Bank of Pakistan (NBP) for the future establishment of the proposed MFC is also not very encouraging. The bank does not have any mechanism to identify the poor regions and poorest in the country to provide micro credit. There are no poverty profiles that can indicate, which regions are the poorest and which villages or localities are severely impoverished in different provinces of the country. Therefore, the loans are mainly provided on the basis of subjective criteria which increase the chances of poor targeting of the scheme. Similarly, the bank does not have the experience, culture and environment for providing microcredit to poor in the country. The procedure for credit and collateral requirements of the bank is so complicated that it not only excludes the poorest from the scheme but it also increases the chances of leakage in the scheme. In fact, during a field visit by the author in one of the pilot project areas in Sindh, it was observed that the bank borrowers are paying extra charges/commission for receiving the inputs from the bank recommended dealers. Ironically, there is neither women staff nor woman borrowers in the pilot project area of NBP, whereas one major objective of the program is à ¢Ã¢â€š ¬Ã…“the empowerment of women through micro financing and women should be 33% among the borrowersà ¢Ã¢â€š ¬?. Other major NGOà ¢Ã¢â€š ¬Ã¢â€ž ¢s providing micro financing in the country are Agha Khan Rural Support Program (AKRSP), National Rural Support Program (NRSP), Sarhad Rural Support Program (SRSP), Orangi Pilot Project (OPP), SUNGI Development Foundations, Kashf Foundation (Kashf), Sindh Agricultural Forestry Workersà ¢Ã¢â€š ¬Ã¢â€ž ¢ Cooperative Organization (SAWFCO), Thardeep Rural Development Program (TRDP). Moreover some international donor agencies like OXFAM and Save the Children Fund (SCF) also provide providing microfinance through intermediary NGOà ¢Ã¢â€š ¬Ã¢â€ž ¢s in different parts of the country (www.spdc.com.pk) 1.4 PROBLEM STATEMENT Studies illustrated that poverty exerts a significant impact on education, health status, savings and the real GDP. For example; the evidence on reducing vulnerability however, is somewhat clearer. The provision of micro credit has been found to strengthen crises coping mechanisms, diversify income earning sources, build assets and improve the status of women (Hashemi et al, 1996); H0 : Micro financing has not reduced the poverty. H1 : Micro financing has reduced the poverty. This hypothesis suggests that as micro financing affects poverty in a positive manner, as a result, education, health status, saving and real GDP of the household has a positive relationship with the micro financing. The existing evidence on the impact of micro credit on poverty is not clear-cut. There is a work that suggests that access to credit has the potential to significantly reduce poverty. (Khandker, 1998); On the other hand, there is also a research which argues that micro credit has minimal impact on poverty reduction, (Morduch, 1998); Being a finance student the motivation was previous research which was very broad but not specific to the chosen statement. A broader perspective was present but the absence of narrower contexts compelled me to undertake this research. The study has many aims. The main purpose was to address the problem of poverty and apply it to the national scenario. Efforts are directed to utilize and process all available data, avoid bias and error, and generate important results. 1.5 OBJECTIVE OF THE STUDY The specific objectives for the study are outlined as follow: 1. To assess the role and impact of micro-finance institutions on the livelihood of poor. 2. To assess factors that hinders the rural poor from participating in Micro finance Institutions 3. To draw conclusion and give some policy recommendations for the successful implementation and development of micro financing programs. Rest of the project is organized as follows. In chapter two we have provided literature review, in chapter three we have defined data and methodology, in chapter four the results have been explained and in chapter five we have concluded the project with some recommendations. CHAPTER NO.2 LITERATURE REVIEW In the past few years there is an increase in research in the area of Micro Financing. Micro finance or micro credit, by providing small loans and saving facilities to those who are excluded from commercial financial services has been promoted as a key strategy for reduction or combating poverty. Access to these facilities is seen as away of providing the client that are economically active with opportunities for self reliance through entrepreneurship, cushioning them against economic shocks, and providing a mean of social empowerment for poor women and men in their communities. Yet although microfinance programs are often driven by a moral imperative to alleviate poverty, the extent to which they are able to reach the poor with their services and likely economic and social impacts continue to be issues of debate. Binswanger and Landell-Mills (1995) states that constraints in relation to suppliers.i.e. Private Banks excludes the poor because small transactions are unprofitable. Providing financial services to the poor and women is not easy. Many borrowers are not credit worthy and dont have profitable projectors. Thus, that the need for micro financing is an undeniable fact. According to Yanor, Benjamin and Pipren (1997), the issue that should be raised in this context is the importance of the informal sector in LDCs economy and its constraint to develop by lack of credit. On top of that, Salad vine and checkering (1991) confirmed this fact by noting that, à ¢Ã¢â€š ¬Ã…“the informal sectorà ¢Ã¢â€š ¬? which contributed about 35% to 65% and 20% to 40% to employment and GDP in most LDCs respectively, is constrained by lack of credit. The provision of micro credit has been found to strengthen crises coping mechanisms, diversify income earning sources, build assets and improve the status of women (Hashemi et al, 1996); Coleman (1999),in his study of a village-banking program in Thailand, advances the literature by expanding on this concept to control for self-selection biases and introduces both observable village characteristics and village fixed effects to control for program placement bias. Utilizing data on 455 households, including participating and non-participating households in treatment villages where a village bank is already offering micro credit, and selected future participants and non-participants in control villages that have been identified to receive a village bank program but have not yet actually received funds, Coleman uses a difference-in-difference approach that compares the difference between income for participants and non-participants in program villages with the same difference in the control villages, where the programs were introduced later. Zaman (1999); explored the relationship between micro credit and the reduction of poverty and vulnerability by focusing on BRAC, one of the largest micro credit providers in Bangladesh. He concluded that micro credit contributes to mitigating a number of factors that contribute to vulnerability, whereas the impact on income poverty is a function of borrowing beyond a certain loan threshold and to a certain extent contingent on how poor the household is to start with. His empirical analysis also suggested that micro credit has the greatest on female control over assets and also on her knowledge of social issues controlling for a host of other characteristics. The Need For Micro-Financing According to Khandker (1998), the alleviation of poverty requires diverse measures. The most important being those, which expand the income and employment opportunities of the poor, enabling them to enhance their living standards providing the poor with access to financial services is one of the many ways to increase their income and productivity. Micro financing programs are developed to fill this gap. The rural poor in LDCs are in desperate needs of credits, microfinance programs are supposed to make available this credit needs and keep the poor to increase their living standard. Lack of saving and capital make it difficult for many poor people who want jobs in the formal and informal sectors to become self employed and to undertake productive employment generating activities, providing credit seems to be a way to generate self-employment opportunities for the poor. In this regard, MFIs in relation to other financial intermediaries has special role and distinguishing features which are given as follows: The primary objective of MFIs is to address the credit needs of those who are willing and ready to reduce their chronic poverty by engaging in farming and small scale production and service activities (Getahun, 2001). Besides provisions of credit facilities, MFIs render managerial, marketing technical and administrative advise to borrowers by reaching borrowers at there place of work.(ibid) MFIs do not require collateral to extend credit in cash or kind to peasant farmers and small entrepreneurs. Instead peer group-leading scheme, character based loans and the promise of subsequent loans is main motivations for repayment (Marguerite, 2001). Saving requirement is introduced as a compulsory feature of lending activity and this saving requirement seems to serve as a motivator for repayment of loan since borrowers choose to repay the loan than losing the amount they saved (Getahun, 2001) 2.2 Country Experiences on Micro-financing 2.2.1 Experience of Bangladesh Why it is that micro-finance becomes a great concern for the whole world as an instrument for poverty reduction in rural areas? It seems because it has recorded success in countries where it has been implemented Abiy (2000). A brief look at this success stories is as follows. One of the most successful countries often mentioned in the development of microfinance is Bangladesh. Micro finance organizations like Grameen Bank, Bangladesh Rural Advancement Committee (BRAC), Proshika (PK), Association for Social Advancement (ASA), largest 20 credit NGOs (not including Grameen Bank), and Bangladesh Rural Development Board (BRDB) are operating in the country mentioned For instance, the Grameen Bank, which was established in 1983 as a challenge to existing collateral-based financial system, has had a promising result. It operates exclusively for the poor on the promise that rural people, who won too little land, support themselves as farmers, can never the less make productive use of small loans and repays them on time. The bank also promotes social development by making the poor accountable to individually and socially. Such intermediation improves productivity and income of the poor. This, in turn, also improves their loan payment rate and hence contributes to the Grameen Bankà ¢Ã¢â€š ¬Ã¢â€ž ¢s financial Viability. As the result it is the most successful credit program for poor and this may be seen from the outreach status and loan recovery so that the bankà ¢Ã¢â€š ¬Ã¢â€ž ¢s loan recovery rate has consistently remained above 90 percent Pit and Khandker (1998). 2.2.2 Experience of some African Countries Formalized micro finance institutionsà ¢Ã¢â€š ¬Ã¢â€ž ¢ in Africa is a more recent phenomenon. The 1950s and 1960s led to a proliferation of rural leading programs that focused on the provision of subsidized credit by government development banks. After this period in 1980s, the replication of Bangladeshà ¢Ã¢â€š ¬Ã¢â€ž ¢s Grameen Bank began to be tested using primary donor funds to provide credit to a wide number of solidarity group members (Paxton and Fruman, 1998). For our purpose, however, we will look only two countries Kenya and Burkina Faso- the former representing relatively densely populated region and the latter is less densely populated. For example, in Kenya KREB (Kenya Rural Enterprise Bank) is a micro finance institution serving the poor in rural and urban areas of Kenya. It was established as an intermediary NGO to provide financial and technical assistance to NGOs in Kenya that are involved in developing or promoting the development of micro and small enterprises. Since 1990, KREB has successfully transformed grants from its development partners into loan capital for nearly 30,000 businessmen and women. It has been able to do so at a positive return since 1994. KREB has distributed over Kenyan shilling 300 million each year since 1995 and has never run short of new customers. The PPPCR (Le project de promotion du petit credit rural) has been particularly innovative in adopting the Grameen style of group lending to the conditions in Burkina Faso. Certainly the sahelian region represents one of the most challenging environment for micro finance due to the combinations of failed prevails efforts low population density, poverty and illiteracy. To overcome some of these obstacles, PPPCR has departed from a pure Grameen replication and has adapted its own financial services and organization. Like the Grameen Bank, PPPCR has grown quickly, but cannot be compared in member of clients. By the end of 1994, PPPCR had served 10,000 clients, and two years later it had reached about 25,000 clients. Despite all of the careful modifications of the Grameen model to the Burkina Faso context, the provision of micro finance services has proved to be quite costly in the Sahel. The reasons for these high costs are more related to the environment (low population density, poor infrastructure, poverty, illiteracy etc.) than to the methodology of group lending itself. The PPPCR has experienced greater efficiency in the past couple of years as it continues to learn from its early experience achieves economies of scale. Generally, the results in this study have shown that none of the institutions have been able to cover the cost of subsidies despite in roads towards financial viability. Most of micro finance institutions limit their ability to achieve high volumes of loan advances and savings. In sum, the most important lesson is that a wide variety of market niches exist in the field of micro finance. In a more recent study, James et al, (2001) estimated the impact of an urban credit program in Zambia on business performance and on a range of indicators of household well-being. They found that borrowers who obtained a second loan experienced significantly higher average growth in business profits and household income. The Bolivian experience indicates that all the institutions studied had, on balance, positive impacts on income and asset levels. (Mosley 2001); In Pakistanà ¢Ã¢â€š ¬Ã¢â€ž ¢s context, Khan (2001); estimated the economic impact of the support program on rural households. He concluded that the economic impact of the support program on rural households is substantially large and probably makes a significant difference to the households close to the poverty line. However, he qualified this conclusion by arguing à ¢Ã¢â€š ¬Ã…“this conclusion holds particularly for those rural households that participate on a sustained basis over a long periodà ¢Ã¢â€š ¬?. However, international experience strongly suggests that microfinance projects do not reach all segments of poor. Even the minimal or no collateral requirements potentially exclude the poorest from the schemes. In Bangladesh, for example, only one forth of all microfinance clients is among the hard-core poor. The UNDP report (2000) claims that à ¢Ã¢â€š ¬Ã…“the hard-core poor having few assets are reluctant to take on the risks of credit, and when they do, it is usually for emergencies and consumption, not for productionà ¢Ã¢â€š ¬?. Extending financial services to the poorest requires innovations which go beyond those that have been developed so far. Morduch (1999); argued, à ¢Ã¢â€š ¬Ã…“The promise of micro finance should be kept in context. Even in the best of circumstances, credit from micro finance programs help find self employment activities that most often supplement income for borrowers rather than drive fundamental shifts in employment patterns. It rarely generate new job for others, and success ha been especially limited in regions with highly seasonal income patterns and low population densities. The best evidence to date suggests that making a real dent on poverty rates will require increasing overall levels of economic growth and employment generations. Micro finance may be able to help some households take advantage of those processes, but nothing so far suggests that it will drive them. The experience of micro finance in Pakistan is not that different from other countries, it is generally recognized that the present micro financing framework is characterized by low coverage (an inability to reach the poor), targeting inefficiency (the poorest are left out, inadequate of support (insufficient loan sizes), a low degree of ease of lack of self financing (dependence on donors). Rodriguez-Meza (2001); studies strategic defaults in microfinance. More specifically, he evaluates the effect of different contract designs on borrower repayment behavior for both individual and joint liability contracts. Rodriguez-Mezaà ¢Ã¢â€š ¬Ã¢â€ž ¢s model shows that lenders willing to grant loans large enough for borrower to achieve their optimal level of investment may face sustainability problems, as borrowers may find it optimal to default under these circumstances. He finds that clients can default on their loans even when they have the ability to repay due to the absence of perfect collateral. His results have serious implication for the viability of MFOs and their role in economic development. In addition to these studies, practitioners, donors and academics concerned about the negative effects of client exit on the overall sustainability of MFOs have conducted several descriptive studies on the issue (Hasan and Shahid, 1995); Khan and Chowdary, 1995; ASA, 1996; Kashangaki, 1999; Maxima Bali, 1999; Painter and MKNelly, 1999; Simanowitz, 1999; Wright et al, 1999; Churchill, 2000; Kuwik and Mashaba, 2000; Churchill and Halpern, 2001; Schreiner, 2001;.Overall, they found that most people are pushed out of MFOs, especially in Africa, due to adverse push factors, such as client maturity and competition, also play a role in pulling clients away from MFOs, especially in Latin America and Asia, where the micro finance industry is more developed and competition is more intense. The governmentà ¢Ã¢â€š ¬Ã¢â€ž ¢s goal of poverty reduction is to be realized through a comprehensive approach that takes into account the interaction of economic, social and governance dimensions. The approach is outlined in the interim poverty reduction strategy paper (IPRSP).Expenditure and budgetary allocations for poverty reduction measures have been enhanced. The poverty alleviation program of the government has five elements: Small infrastructure projects, Social safety net, Food support program, Improving social indicators and Expanded access to MF and skills development services through grassroots Organization such as NGOs and village organizations. Greater private sector involvement in poverty reduction is envisaged. The social action program phase two (from January 1997 to June 2002) aims to improve access to basic social services like primary education, primary health care, population welfare services, potable water, sanitation and middle schooling. The government has also responded to growing unemployment, with a series of scheme including the mass self employment program. The incidence of poverty is to be reduced from 33% of population to be target kevel of 15.1% be end 2008. To enhance outreach of MF, the government has adopted a comprehensive approach to address issues and constraints through a conductive policy framework, appropriate supervisory and regulatory infrastructure, institutional capable of outreach to the poor and finally, investments in social intermediation and basic infrastructure. The government has plans to restructure DFIs.Emphasis will be placed on good governance, sustainability, and public private partnership, community based services delivery through NGOs, Pro-poor focus and gender concerns. This strategy complements the effort of the PPAF and other MF suppliers and provides the basic for a concerted effort to enhanced outreach in a grossly underserved market. Gender focus will be emphasized in the strategies and underlying activities in various government programs. A permanent commission on the status of women has been formally announced to protect womenà ¢Ã¢â€š ¬Ã¢â€ž ¢s rights. The IPRSP also recognizes the gender dimension of poverty and proposes reform of discriminatory laws and measures to coordinate policies. Within the IPRSP framework, a review and modification of economic and social policies to incorporate gender perspectives is planned. Strengthening of gender focal points in federal and provincial women development departments and identification of targets for the implementation of the National Action Plan (Ministry of Women Department) have been envisaged. On the basis of the literature reviewed, we have developed the following conceptual framework. Fig 2.1 DEVELOPMENT OF CONCEPTUAL FRAMEWORK Poverty Micro financing in education, health status, savings and real GDP Dependent variable Independent Variable P= f (EDU, HS, SAV, RGDP) Where, EDU = Education HS = Health Status SAV = Savings RGDP = Real Gross Domestic Product. CHAPTER NO.3 DATA METHODOLOGY This part of the report illustrates the methodology that will be used to conduct this study. The conceptual framework for the study is depicted in Fig 2.1. We want to study the dependence level of the dependent variable and its association with the independent variables. Pool regression analysis is a well recognized methodology to analyze relationships and dependence among different variables. The research instruments used in this study were ordinary least square multiple regression analysis, Granger causality test. In view of the limited time frame of the study the sample size was restricted to thirty one. This study was descriptive in nature and deals with the most important and alarming issue of Micro financing. REGRESSION ANALYSIS: In statistics, regression analysis is a collective name for techniques for the modeling and analysis of numerical data consisting of values of a dependent variable (also called response variable or measurement) and of one or more independent variables (also known as explanatory variables or predictors). The dependent variable in the regression equation is modeled as a function of the independent variables, corresponding parameters (constants), and an error term. The error term is treated as a random variable. It represents unexplained variation in the dependent variable. The parameters are estimated so as to give a best fit of the data. Most commonly the best fit is evaluated by using the least squares method, but other criteria have also been used. Regression can be used for prediction (including forecasting of time-series data), inference, and hypothesis testing, and modeling of causal relationships. These uses of regression rely heavily on the underlying assumptions being satisfied. Regression analysis has been criticized as being misused for these purposes in many cases where the appropriate assumptions cannot be verified to hold. T à ¢Ã¢â€š ¬Ã¢â‚¬Å" TEST A t-test is any statistical hypothesis test in which the test statistic has a t distribution if the null hypothesis is true. It is applied when the population is assumed to be normally distributed but the sample sizes are small enough that the statistic on which inference is based is not normally distributed because it relies on an uncertain estimate of standard deviation rather than on a precisely known value. COEFFICIENT OF DETERMINATION In statistics, the coefficient of determination, R2 is used in the context of statistical models whose main purpose is the prediction of future outcomes on the basis of other related information. It is the proportion of variability in a data set that is accounted for by the statistical model. It provides a measure of how well future outcomes are likely to be predicted by the model. DURBINà ¢Ã¢â€š ¬Ã¢â‚¬Å"WATSON STATISTIC The Durbinà ¢Ã¢â€š ¬Ã¢â‚¬Å"Watson statistic is a test statistic used to detect the presence of autocorrelation in the residuals from a regression analysis. It is named after James Durbin and Watson. If et is the residual associated with the observation at time t, then the test statistic is Since d is approximately equal to 2(1-r), where r is the sample autocorrelation of the residuals,[1] d = 2 indicates that appears to be no autocorrelation, its value always lies between 0 and 4. If the Durbinà ¢Ã¢â€š ¬Ã¢â‚¬Å"Watson statistic is substantially less than 2, there is evidence of positive serial correlation. As a rough rule of thumb, if Durbinà ¢Ã¢â€š ¬Ã¢â‚¬Å"Watson is less than 1.0, there may be cause for alarm. Small values of d indicate successive error terms are, on average, close in value to one another, or positively correlated. If d 2 successive error terms are, on average, much different in value to one another, i.e., negatively correlated. In regressions, this can imply an underestimation of the level of statistical significance. TEST OF SIGNIFICANCE A statistically significant difference simply means there is statistical evidence that there is a difference; it does not mean the difference is necessarily large, important, or significant in the common meaning of the word. The significance level of a test is a traditional frequents statistical hypothesis testing concept. In simple cases, it is defined as the probabilities of making a decision to reject the null hypothesis when the null hypothesis is actually true (a decision known as a Type I error, or false positive determination). The decision is often made using the p-value: if the p-value is less than the significance level, then the null hypothesis is rejected. The smaller the p-value, the more significant the result is said to be. In more complicated, but practically important cases, the significance level of a test is a probability such that the probability of making a decision to reject the null hypothesis when the null hypothesis is actually true is no more than the stated probability. This allows for those applications where the probability of deciding to reject may be much smaller than the significance level for some sets of assumptions encompassed within the null hypothesis. The following model is generated after analyzing the theoretical framework. P= f (EDU, HS, SAV, RGDP) P= C + B1 EDU + B2 HS + B3 SAV + B RGDP Where, P = Poverty EDU = Education HS = Health Status SAV = Savings RGDP = Real Gross Domestic Product HYPOTHESIS After the analysis of the theoretical framework and the model the following hypothesis are generated. The à ¢Ã¢â€š ¬Ã…“impact on povertyà ¢Ã¢â€š ¬? is influenced by the following variables Education Health Status Savings Real GDP Poverty = f (Micro financing in Education, Health Status, Savings, and Real GDP) Hypothesis in statistical form is narrated as H0 : ÃŽÂ ² = 0 That there is no relationship of the above mentioned variables with the poverty. HÄ ±: ÃŽÂ ² à ¢Ã¢â‚¬ °Ã‚   0 That there is a relationship of education, health status, savings and real GDP with micro financing. Or we can say that An appropriate financing tool for low-income people leads them to uplift their income and savings. Increase in income and savings of low-income people enable them to contribute in the development of social status and social structure. When the income of a household will increase, it will ultimately increase the expenditure on education and health. CHAPTER NO.4 RESULTS The results of the study and the vital statistical measures are shown in the tables and then the hypotheses are tested for the accuracy. Firstly, every effect obtained by using the pooled data is discussed. Finally, the hypotheses are tested on the basis of significance test. Table 4.1 Descriptive Stats    POV EDU HS SAV RGDP Mean 82.75 98.33556 153.12 604.7967 -1.05556 Median 63.8 98.34 160.07 564.5 0 Maximum 131 111.1 215.5 1206.8 23.1 Minimum 49.6 82.8 98.27 160.57 -33.84 Std. Dev. 32.22468 9.528934 44.42356 427.5875 16.52883 Observations 31 31 31 31 31 Table 4.2 presents the results of descriptive stats across the variables we have selected. The total numbers of observations undertaken during the research are 31. Table 4.2 Correlation Table    POV EDU HS SAV RGDP POV 1 0.669025351 0.409382256 0.030883716 -0.53541 EDU 0.669025351 1 0.67371188 0.607326216 -0.16211 HS 0.409382256 0.67371188 1 0.774163 0.261008 SAV 0.030883716 0.607326216 0.774163 1 0.173355 RGDP -0.535414159 -0.162110489 0.261007506 0.173354666 1 Table 4.2 presents the results of correlation across the variables we have selected. The correlation values among Poverty Savings, Poverty RGDP, Education RGDP and Health status RGDP are found to be low. Table 4.3 Causality Test Two way relationships are explained by causality. So we name this test as Pair wise Granger Causality test. Pair wise Granger Causality Tests       Null Hypothesis: F-Statistic Probability          POV does not Granger Cause EDU 1.04751 0.35302 EDU does not Granger Cause POV 0.19883 0.67431 POV does not Granger Cause HS 1.83585 0.23344 HS does not Granger Cause POV 0.72722 0.43273 POV does not Granger Cause SAV 3.60483 0.13044 SAV does not Granger Cause POV 1.11491 0.35057 POV does not Granger Cause RGDP 2.07521 0.20926 RGDP does not Granger Cause POV 0.29329 0.61137 EDU does not Granger Cause HS 0.62858 0.46382 HS does not Granger Cause EDU 0.00997 0.92433 EDU does not Granger Cause SAV 1.16036 0.34202 SAV does not Granger Cause EDU 0.57798 0.48945 EDU does not Granger Cause RGDP 2.69949 0.1613 RGDP does not Granger Cause EDU 1.87547 0.22915 HS does not Granger Cause SAV 0.39185 0.56528 SAV does not Granger Cause HS 2.63726 0.17971 HS does not Granger Cause RGDP 0.39708 0.55627 RGDP does not Granger Cause HS 1.71224 0.24761 SAV does not Granger Cause RGDP 0.00048 0.98356 RGDP does not Granger Cause SAV 0.00422 0.95133 Table 4.3 provides the test of causality. Results show that in all the cases we failed to reject the null hypothesis, i.e.; variable i doesnà ¢Ã¢â€š ¬Ã¢â€ž ¢t affect variable j significantly, Where i, j= Poverty, Education, Health status, Savings and RGDP, such that i à ¢Ã¢â‚¬ °Ã‚   j. Table 4.4 OLS Regression Dependent Variable: Poverty Method: Least Squares Variable Coefficient t-Statistic Prob.      (Slope) C 133.7116 15.83492 0.0001 EDU -0.057115 -0.373254 0.7279 HS 0.024077 0.145556 0.8913 SAV -0.141915 -0.870543 0.4331 RGDP 0.018588 3.430898 0.0265 R-squared 0.208634 Adjusted R-squared -0.384891 S.E. of regression 7.025312 Durbin-Watson stat 1.743389 Table 4.4 presents the multiple regression result for the following model. Poverty = f (Micro financing in Education, Health Status, Savings, and Real GDP) P= f (EDU, HS, SAV, RGDP) P= C + B1 EDU + B2 HS + B3 SAV + B RGDP It is found that the coefficient (slope) of education savings are with correct theoretical signs. The remaining variables are with wrong signs. The coefficient which are statistically significant are also the same i.e. education savings. The value of R ² (coefficient of determination) is found to be low, suggesting no problem of multi-co linearity. Durbin-Watson test shows that there is no problem of auto-correlation. Table 4.5 OLS Regression Log Dependent Variable: Log Poverty Method: Least Squares Variable Coefficient Std. Error t-Statistic Prob.   (Elasticity) C -151.13 41.88386 -3.608312 0.0226 LEDU 1.800471 0.526959 3.416721 0.0269 LHS 0.621705 0.136172 4.565588 0.0103 LSAV -0.065215 0.012087 -5.395264 0.0057 LRGDP -1.019242 0.228874 -4.453297 0.0112 R-squared 0.960243    Adjusted R-squared 0.920485 S.E. of regression 9.086818 Durbin-Watson stat 1.954621 Table 4.5 presents the log regression result for the following model. Poverty = f (Micro financing in Education, Health Status, Savings, and Real GDP) P= f (EDU, HS, SAV, RGDP) P= C + B1 EDU + B2 HS + B3 SAV + B RGDP It is found that the coefficient (elasticity) of savings RGDP are with correct theoretical signs. The remaining variables are with wrong signs. The coefficients which are statistically significant are education, health status, savings, and real GDP. The value of R ² (coefficient of determination) is found to be high, suggesting problem of multi-co linearity. Durbin-Watson test shows that there is no problem of auto-correlation. On the basis of results, we have concluded the whole project with some recommendations in the next chapter. Chapter no.5 CONCLUSION RECOMMENDATIONS CONCLUSION Poverty is a multifaceted phenomenon that includes, but goes beyond lack of adequate income. The overarching objective of development in many countries has been and continuous to be the eradication of all faces of poverty. Rapid as well as distributed growth in income has always been viewed as an instrument for achieving this objective. Pakistan has in the last three years initiated a bold reform program for accelerating growth as well as a focused third generation microfinance sector development program providing a conducive policy framework and support mechanisms to encourage private instruments in the sector. The framework allows everyone to contribute for poverty reduction according to their priorities and competency. The framework provides NGOs a long-term resource support for social services as well as micro credit in a transparent manner based on the quality of their outputs. The state bank of Pakistan provides for a regulatory framework allowing for the establishment of licensed MFIs, which can mobilize resources from local markets. The government has set up mechanisms for sharing social intermediation costs and risks of banking with the poor.The government will continues to play a catalytic role and it is now for the donors, private investors, civil society institutions and development organizations to take advantage of and make their contribution for poverty reduction, in a sustainable manner. A large amount of research, and practice, should be demonstrated for creating the positive effects on pro poor financial sectors development. The permanent deepening of financial markets should be build by the government in a manner that provides the access to the poor and can achieve the following outcomes: Economic growth and job creation can be stimulated, as small business development and access to housing finance generates new cycles of accumulation and effective demands. Poverty can be reduced, as productive assets in the hands of the poor enable them to build a stream of income. Access to finance, in the form of savings, credit or insurance can play a vital role in à ¢Ã¢â€š ¬Ã…“smoothingà ¢Ã¢â€š ¬? the income of the poor, and so reducing their vulnerability to financial shocks. Financial services can also play a key role in building viable communities by contributing to the sustainable livelihood strategies of poor households. It is often argued that economic integration or globalization has played an important role in reducing poverty in developing countries though its impact on growth. More open economies, and those who have been successful in accelerating their pace of integration, have recorded the best growth performance, whereas developing countries with inward-oriented policies have suffered from poor growth rates. By stimulating higher growth, integration can have a strong positive impact on poverty reduction. The findings reveal that most of the recipients of credit are not hard-core poor. According to the Pakistan official poverty line, about 51 and 11 percent of rural and urban borrowers respectively are poor. About 69 percent of rural borrowers have ownership of land and a majority of borrowers own their houses in rural areas. For further research, it is suggested that greater attention should be on the composition and management of household economic portfolios (agriculture, livestock, trading) analysis of differences in impact should be across different socioeconomic or poverty level of borrowers, and more attention should be given to how program design, performance and context influences affect. RECOMMENDATIONS Government should focus its activities towards a few critical areas mainly poverty reduction through employment generation. Government should not only act as a facilitator and but actively engaged in developing economic and social infrastructure, particularly water, roads, schools, hospitals, training and skill development facilities. Agriculture Sector should be developed through the timely availability of critical inputs. The government should protect poor farmers from volatility in prices of agricultural procedure. Development of farms to market roads should be given the utmost priority. The government and NGOs involvement should educate the locals how to make best use of micro-credit facilities. The government should disseminate information about its poverty reduction initiatives and how the poor can benefit from the governmentà ¢Ã¢â€š ¬Ã¢â€ž ¢s policies and programs. School and hospital staff should be recruited from amongst local residents. The communities should be involved in the selection process. NGOs AND MFBs (Micro finance Bankà ¢Ã¢â€š ¬Ã¢â€ž ¢s) should achieve substantial outreach while remaining commercially oriented and focused on achieving financial stability. Government should encourage organization like NRSPs (National rural support program), RSPs (Rural support program) to extend their outreach. Micro finance organizations should use well organized and systematic criteria in order to identify poor and non poor households. Usually, the borrowers in their programs are mainly the better off among the poor. PPAF (Pakistan poverty alleviation fund) should be strongly supported by the government so that loans can be given in an organized way to the poor and needy people. Most of the NGOs providing Micro finance are either receiving funding from the government or donor agencies. Their main source of income are these sources and, not from their own activities. So, they should try best to improve their operational effectiveness and achieve sustainability.