Sample Finance Case Study Paper on Case 2: Bolivia

Case 2: Bolivia


The concept of microfinance began in Bolivia in the early 1980s. Other neighboring countries had already adopted the practice. Microfinance began in Bolivia at a time when the country was under a financial crisis. It was also battling with issues of high population and low economy. However, the country has seen a unique experience in Microlending. Since the mid-1980s, many lending institutions have been set up in the country.

Question one

Competition has several effects on the micro-lending sector especially. Clients enjoy low-interest rates on loans borrowed from Micro Financial Institutions that had charged high rates for the previous fifteen years. Transaction costs have also been reduced due to competitors trying to win a majority of clients. Another effect of competition to individual clients is that it gives them the freedom to shop for credit in the market places. At the same time, competition relaxes the repayment period. However, competition may also have a negative effect of causing clients to become overindebted to several lending institutions. Secondly, competition also affected the micro-lending industry in many ways. A belief that changed because of competition is one that views the market as limitless and the products and services as unimportant to clients. In addition, with increasing competition, lending institutions must look for means to increase the efficiency of service to their clients.

Question two

Julie and Estefan have discovered that failure to implement the program as prescribed and fraud were the key factors that have contributed to arrears. Another discovery that they made was that stress coming from the team and conflicts that arose with policies have also been challenging issues surrounding the delinquency problem. They should recommend that Mujeres Unidas should evaluate the procedures that they use and see which ones need revision. They should also advise Mujeres Unidas to investigate the areas where arrears are few and look into any other possible issue. Third, Julie and Esteban should advise Mujeres Unidas to try to collect some information in other regions and make a comparison with the company. This way they will be able to identify areas that need improvements. The company should also revise its current policies and incorporate feedback. This will allow proper communication between the clients and the management concerning the policies that had been already revised. A feedback system will also allow any challenges that may be faced by the staff to be addressed by the management.

Question three

The Community Association in Cochabamba should take the following step in solving the immediate delinquency issue. They could ask members of the association to contribute some money to pay for the payments. They could also make some money from their savings kit. Another action that could be taken by the association is to do a follow-up on the progress of Ana on the issue of a missed payment. The long-term solution is for the association to educate its members to recover payments. The associations could also encourage members to work in unity and find amicable ways to end misunderstandings. Marisol could also be informed to review the procedures of the association to allow the best procedures to be implemented. Another long-term plan is for the members to be involved in the associations. This way, they will become familiarized with the policies and as a result will improve the performance of the association.


The relevance of the Bolivia case is to explain how nonprofit organizations provide credit services to women and empower them in their activities. The case further explains how the management of microfinance institutions has a heavy task of identifying and controlling delinquency problems.