Motivations of an arsonist

Motivations of an incendiaryarsonistArsonist is a person who bushels anything on upgrade intentionally. This intentional act is called the arson. Generally a home or another type of structure has been targeted by the Arsonist. Arson is committed for a number of reasons, and the crime is strictly punished throughout the military personnel because arsonist sets property and lives at risk. In certain parts of the globe, if somebody expires in an arson arouse, it is deemed to be a murder, instead of neglectful homicide or manslaughter because arsonist is considered such a reprehensible criminal. In all cases, an arsonist holds a prison term. (Holmes Holmes, 2008, pp. 3)In the majority of states, arson has been extended to comprise burning arrangements in addition to dwellings, burning the own assets for unlawful purposes, and destruction caused by an explosion or a fire. Currently if some one arson his/her house to avail the policy benefits because the amount of insurance is highe r than the actual real value of property that would be linked to arsonist (Stewart, 2006, 15-16). Other motives for arsonist would be to bomb or burn a religious place in a hate crime, or burn the property in vengeance for a denial to deal out it. If an arsonist burns down his building as a figure of cheap destruction and unintentionally sets half the neighborhood on fire that may or maybe not an arsonist, depending on the command of the state.Fire by an arsonist includes the induction of a heat source that can be as unadorned as a match or as compound like dangerous chemicals with very low explosion temperatures. By the rule of legislation a fire is thought to be an arson fire when all other unintended causes have not been met. We can say that reason of a fire was arson and consequently intentional, the detective must have adequate proof the one of the issues in the arson triangle was interfered with.Motives for ArsonThe motives of that motivate arsonist vary from situation to s ituation and much research has been established to determine the motives of arsonists, which has allowed the neighbourhood Fire Team, to compile a list of ten broad sort outs of motives, wasted from current study and from the experience of group members. Such motives containVandalism This group covers intentional and willful fire setting that is just for the sake of it (Stewart, 2006, 18). It as well contains fire setting due to d atomic number 18 and colleague group pressure. Vandalism motivated arson is usually spontaneous and impulsive and engages manifold executors. Schools are lots the target of vandalism motivated arson, as are abandoned or empty properties and, in the experience of this project, abandoned vehicles. Unfriendly behavior fires are alike often motivated by vandalism.Curiosity/ Fire Play This group is usually utilized when the fire has been set by young kids who do not realize the hazards of fire and were playing with, for antecedent, discarded cigarette lig hter or matches. The multitude concerned are generally taken onto the fire setters intersession program.Excitement This group contains those who set fires for thrills, attention seeking, identification and sexual perversion. It can be seen already that none of these groups are clear-cut and one may lead to another for instance vandalism may lead to the arsonist setting fires for the thrill of it and childhood fire play may lead to setting fires intentionally for the amount of parsimony it generates from adults.Revenge This group contains fires set for individual requital (against a spouse, partner or other family member) retaliation against regime or other institutions and fires which are set asretribution against rival gangs or groups or in order to intimidate. In fact, much arson has acomponent of retaliation (aware or unaware) as part of the motive. Arsons of this category are often much greater planned and carried out than other types, and may be one-off events. criminal offe nse-concealment This is used to explain arson fires which are set in order to hide another offense or vital proof. For instance, a room that a murder had taken place great power be fired by the executors in order to destroy the body and destroy the crime scene. Stolen vehicles are often set alight after world abandoned in order to try and destroy any forensic proof. (Schulz, 2007, pp. 55)Profit This type contains insurance fraud and arson executed against a competitor to try to put them out of business.Extremist This type contains arson perpetrated by terrorists or other extremists (animal rights activists) and also arson which happens during or as part of disturbances or other civil riot.Racial This type is fairly self-explanatory and covers all fires which are set for reasons of ethnic tension or intolerance.Psychological illness Neighborhood Fire Team employees have attended many incidents, both within housing units and in the wider society, where fire setting has been due to psychological illness.Serial Arson This is where one person working alone sets a series of fires, often over a long period of time. Serial arsonists may have one or more of the other causes also involving to their fire setting behavior. (Pawson, 2006, pp. 91)Although the causes for arson are sometimes difficult, the law is generally crystal clear anybody who intentionally sets fire to something will be punished for it. In some areas, a fire that is caused by great negligence or disregard will also be classified as arson. The punishment for committing arson depends on the degree of the offense how much property was damaged the total cost of the damages, and whether or not people were trapped in the fire. The intent also performs a role whether the fire was set to defraud an insurance agency, cover up an offense, was part of a retaliation offense, or was intended to amuse or entertain the arsonist, for instance.Most parts of the world have arson researchers, who examine the sites of s uspicious fires to decide the cause of the fire and whether or not it was arson. This job can sometimes be quite complex, particularly when proof is obscured by the efforts of those attempting to put out or clean up the fire. Arson examiners use a range of methods to inspect the sites of fires containing chemical analysis of proof, the use of sniffer dogs, and simple powers of surveillance.ReferencesHolmes, Ronald M. Holmes, Stephen T. (2008). Profiling Violent Crimes An Investigative Tool. New York Sage Publications, pp. 1-5.Stewart, Gail. (2006). Crime Scene Investigations Arson. New York Lucent Books, pp. 15-25.Pawson, Stuart. (2006). Some by Fire. Washington Allison Busby, 92.Schulz, Karen K. (2007). Crime Scene Detective Arson. New York Prufrock Press, Inc, pp. 54-60.

Overview of Domestic Violence in the UK

Overview of Domestic Violence in the UKDomestic frenzy is very satisfying and common in the UK, and indeed internationallyIn the UK house servant violence accounts for a quarter of all culpable offense, despite these figures it is recorded that only 5 per centime of recorded cases of house servant violence end in assurance, less(prenominal) than 20 per cent of rapes and sexual assaults are reported to the honor, and less than 6 per cent of rapes result in conviction. Wells points out as a comparison, the itemize of women that are in prison, and the seemingly trivial reasons for there incarceration.There are now over 4,500 women in prison, an increase of 194 per cent in the last ex years. Most women are convicted of non-violent rudenesss, such as shoplifting. One woman out of 12 judges in the House of Lords, 5 women out of 43 law Chief Constables, 18 women out of 42 Chief smirchrs of Probation, 7 women out of 42 Chief go past Prosecutors, 31 women out of 138 Prison Gover nors. There was proof of sexual torture and discrimination experienced by women working in the system.Domestic violence is not discriminatory and occurs between people of all kind classes, amongst all racial and religious groupings and in all age groups. Crime and other statistics can only provide us with a taster of the real picture. The nature and extent of the suffering which is endured by families behind closed doors is very frequently something that is kept buck private. Victims of domestic assaults often do not complain of violence, every through fear of being further assaulted, or because they are too embarrassed and ashamed to reveal their plight to professionals who might be able to advert them. Although the traditional perspective is that victims of domestic violence are predominately women, this is not always the case, men, children and the elderly are vulnerable to domestic violence too. This said there is an abundance of evidence to show that it is women and child ren who are the main victims. Children who themselves suffer violence at the hands of a parent are in the main cling toed by the state though child protection procedures. The remedies provided by the cultivated law are accordingly generally used to obtain protection for an adult victim.As Subedi points out There are several causes of violence against women. These range from historical unequal power relations between men and women to cultural apprehensions, womens sexuality, inaction on the part of the agents of the State to the traditional perception in law and practice that matters within the family and between a husband and wife are basically private matters in which outside or State enquirement should be kept to a minimum. Unlike other forms of crime, the problem with domestic violence has been that even the law itself is not hale- developed and the law that is there on this issue has not been enforced as vigorously as possible. It is from this premise that efforts have b een made in the recent past both at national and international level to strengthen the law on traditional patterns of violence and to expand the scope of the law to cover new forms of violence. While the problem often encountered in this process at national level is the doctrine of privacy and the concept of the sanctity of the family, the wave-particle duality of the public/private sphere is the problem at international level.In the UK, domestic assaults are sinful rudenesss and a man who attacks his wife can be prosecuted for his actions. He whitethorn be charged with one or more of various offences against the person allowd the offence of rape. The Protection From Harassment diddle 1997 introduced crocked measures to assist those who are victims of a course of conduct, which amounts to bedevilment and made such conduct a crime. However, victims of domestic violence and harassment may be loth(p) to become involved in the prosecution process for a number of reasons. These in clude the realisation by the victim that the matter is no longer infra her control once she has reported an attack to the police. It ordain be up to the police to decide whether and how they wish to investigate her complaint, and it will be the decision of the Crown Prosecution Service whether or not to go ahead and press charges.This loss of control acts as a disincentive to women to report incidents of violence, as they may well fear the consequences of their action if the police and Crown Prosecution Service fail, as they see it, to respond in an appropriate fashion. In the past the police have been unwilling to intervene in cases of domestic violence, and to prosecute offenders. This perception of the police as unwilling to come to the assistance of victims of domestic assaults is still observable today, even though domestic violence is taken much more seriously by the police than in the past, and even though police practices in many areas have changed radically in favour of the victim.Figures from British Crime Surveys suggest that domestic violence forms the largest single category of violent crime. In a survey carried out by Davis and Gretny revealed that of a total of 448 assaults, all of which were referred to the CPS, there were 243 (54 per cent) non-domestics and 205 (46 per cent) domestics. If the British Crime Survey finding that domestic violence comprises 20 per cent of all assaults can be believed, and if the Bristol police files that they surveyed can be taken to be representative of the current position, it would appear that domestic assault is significantly more likely to be prosecuted than is assault in other contexts. This is remarkable given the widely accepted picture of domestic violence as a crime both under-reported and under-recorded.In such situations a victim of domestic violence, may apply for an injunction under the Davis G Cretney A, (1996) Prosecuting Domestic Assault, Criminal Law come off Mar 162 174 or a non- molestat ion regulate under s42 of the Family Law Act 1996. The statutes have somewhat differing aims although both statutes do aim to prevent harassment and can be compared and this will be discussed. Only associated persons can apply under the FLA 1996 anybody can apply under the PHA 1997. There are wider remedies available under the FLA 1996, including the power to even up phone line orders. Damages can be awarded only under the PHA 1997. This is an important point. Domestic violence/harassment knows no social boundaries and therefore an award of damages can be a salutory lesson. It can also be an important remedy for those who are scared to report, for fear of financial hardship. such damages can, of course, if not promptly paid, be enforced in all the usual ways including execution, attachment of earnings or a charging order on land if necessary followed by an order for sale. Presently, a power of arrest can be attached to FLA 1996 orders but not to PHA 1997 orders.However, althoug h the power of arrest is bear for moving in orders it is to be abolished for non-molestation orders. A warrant of arrest can be issued under either statute. Breach of an injunction under s 3 of the PHA 1997 is an offence breach of a non-molestation order is made an offence by s 42A of the FLA 1996.(7) District judges have full jurisdiction under both statutes to make orders, issue warrants and deal with contempt of court transactions for breach of orders. Applications under the FLA 1996 are family proceedings governed by the Family Proceedings Rules 1991 and must be issued in a family proceedings court, a divorce county court, family hearing totality, care centre or in the Principal Registry or Lambeth Shoreditch or Woolwich County Courts.Applications under the PHA 1997 are gracious proceedings governed by CPR 1998 Part 65 and can be issued in the High Court (Queens Bench Division) or in the county court for the order in which either the claimant or the suspect resides or carr ies on business.Exceptionally, concurrent proceedings under both statutes are appropriate. They should be consolidated and tried together. A person arrested and brought before the court pursuant to the FLA 1996 can be remanded in custody or on bail. There is no power to remand a person arrested and brought before the court pursuant to the PHA 1997. Punishment for contempt of court under either statute is subject to the maximum of 2 years handcuffs provided by the Contempt of Court Act 1981. The sentence must be proportionate to the seriousness of the contempt. Conviction for breach of an injunction under s 3 of the PHA 1997 or for breach of a non-molestation order under s 42A of the FLA 1996 both carry a maximum sentence of 6 months and/or a very well not exceptional the statutory maximum on summary conviction, and a maximum sentence of 5 years and/or fine on conviction on indictment. Both statutes provide that a person cannot be both punished for contempt of court and prosecuted in respect of the same incident. The PHA 1997 also creates offences (ss 2 and 4) not dependant on a civil injunction the FLA 1996 does not.By s 1 of the PHA 1997, a person must not pursue a course of conduct which amounts to harassment of another and which he knows or ought to know amounts to harassment of another. By s 7(3) a course of conduct must involve conduct on at least 2 occasions and by s 7(4) conduct includes speech. Section 7(3A) was inserted by the Criminal Justice and Police Act 2001 and provides A persons conduct on any occasion shall be taken, if aided, abetted, counselled or procured by another (a) to be conduct on that occasion of the other (as well as conduct of the person whose conduct it is) and (b) to be conduct in relation to which the others knowledge and purpose, and what he ought to have known, are the same as they were in relation to what was contemplated or reasonably foreseeable at the time of the aiding, abetting, counselling or procuring.The phrase co urse of conduct has caused difficulty. In R v Hills held that assaults in April and October 1999 were not a course of conduct, particularly since the parties had been reconciled in the interim. In Lau v Director of Public Prosecutions quashed a conviction on the grounds that two incidents 4 months apart were not a course of conduct. The fewer the number of incidents and the wider the time lapse between them, the less likely that they give rise to a course of conduct. On appropriate facts, a charge of assault should be preferred. Indeed, many cases justify both a charge of assault and of harassment.The definition of harassment (and assault) is the same in civil and criminal proceedings, and thus arguments on whether or not there was a course of conduct can arise in both civil and criminal courts. In civil cases, where they may be doubt on whether there is a course of conduct then, as in crime, where appropriate, assault can also be alleged.In June 2003 the Home Office published a con sultation paper setting out proposals to tackle domestic violence. The paper indicated the Governments strategy was based on three elements to prevent domestic violence occurring or recurring to increase support for victims and to ensure improved legal protection and justice for domestic violence victims. This led to the enactment of the Domestic Violence, Crime and Victims Act 2004 which came into force in March 2005.DVCVA 2004 closely links the civil and criminal processes through new police powers, and through a new criminal offence of breach of a non-molestation order. It also creates a new offence of causing or permitting the death of a child or vulnerable person. It also requires the adoption of a code of practice and a victims fund, to be financed by surcharges on fines and some fixed penalties. It creates the power for the Criminal Injuries Compensation Authority to recover money from offenders, and makes a variety of other changes to criminal procedure, powers and sentenci ng.Non-molestation or occupation orders are key tools in providing protection for those who fall within the category of associated persons. Prior to the enactment of the DVCVA 2004 eligibility extended to those living together as man and wife (cohabitants), or former cohabitants, and those who live or have lived in the same house champion (except if they are employees, tenants or boarders, or a lodger). DVCVA 2004 extends the category of associated person to include cohabitants in a same-sex relationship living in an equivalent relationship to that of husband and wife.The power to attach a power of arrest to a non-molestation order is removed by this act. Instead, common assault becomes an arrestable offence under the Police and Criminal Evidence Act 1984 and breach of a non-molestation order becomes a criminal (arrestable) offence.If, for whatever reason, no prosecution is mounted, perhaps because of the wishes of the victim, that does not prevent an application to the civil court to commit for breach of the order. Nothing prevents the commencement of civil proceedings while criminal proceedings are pending, following arrest, though arguably a family court should await the determination of the criminal process.A new criminal offence is created under s42A will be punishable on conviction on indictment by a term of imprisonment not exceeding five years, or a fine, or both, and on summary conviction by a term of imprisonment not exceeding 12 months, or a fine not exceeding the statutory minimum, or both. The prosecution will need to prove the existence and terms of the order the fact that the defendant was aware of the order conduct that amounts to breach of that order, provided the breach is relevant only to sentence and not to guilt or innocence and the lack of reasonable excuse. shaver changes are made to occupation orders under the DVCVA 2004 these require a court, in proceedings for an occupation order, to consider whether or not to make a non-molestation o rder. different changes include changes to reflect cohabitation as opposed to marriage. Nothing in the new Act removes the right of the court to attach a power of arrest to an occupation order. This may cause some difficulties where a court makes both a non-molestation order and an occupation order, particularly if a court has attached a radius clause, for example not to come within a specified distance of the applicants home.Restraining orders under PHA 1997 form an integral part of the machinery for the protection of victims of domestic violence. DVCVA 2004, s 12, will extend the courts power to make a restraining order under s 5 of PHA 1997.Under s 5, when a court is sentencing or otherwise dealing with a person who is convicted of an offence under s 2 or s 4 of that Act, then as well as sentencing him or dealing with him in any other way, it may make a restraining order. The restraining order is particularly useful, as it provides for the continued safety of the victim but can only be made in cases where a conviction had been obtained for a s 2 or s 4 offence.As Wells points outA resume of current concerns suggests that much has changed in the last few decades. There is a ministerial group on domestic violence headed by Home Office minister, Baroness Scotland. The Solicitor General, a woman, has made tackling domestic violence a policy priority. She has talked to the President of Family Division, a woman. The Law Commission has recommended the abolition of the partial defence of exacerbation for reasons largely to do with its differential impact on male and female partner killers. The psychological trauma associated with rape and other forms of sexual harassment has been acknowledged, much attention has been given to improving police practices, and the offences themselves have been reconfigured around the concept of trust. It is difficult to believe that these changes would have come about without the influence of feminism in general and feminist legal commentators in particular. These changes also fit into a much wider pattern in which victims have moved very much centre stage along with the associated restorative justice movement.Internationally moves are being made to improve the situation for women. There have been international efforts to strengthen womens rights. This perception has contributed to the reluctance on the part of many countries to adopt either a protocol to CEDAW providing for individual petition or a protocol on violence against women with similar remedies for women. Moreover, the perception of States towards certain types of violence seems to be different in developed Western countries from that of certain developing countries. While widespread dissemination of grownup material and use of women as sex objects by the media has been viewed as violence against women by women in certain developing countries, the same does not necessarily hold true in certain Western countries such as the Netherlands and the Unit ed States, which opposed the inclusion of this type of violence in the definition of violence in the draft UN declaration on violence against women. This type of activity cannot be violence for those women who voluntarily allow themselves to be used as sex objects by the media. But it may be seen as a psychological violence against women in general by those who disapprove of such treatment of women by the media. The plain campaigns organised recently by grass-root womens groups in India against the world beauty competition in Bangalore is an example of such differences of opinion.So is British law sufficient? Does it protect women adequately? There is generally are much greater awareness of domestic violence, and the criminality and culpability has increased some what over the last decade. cognizance has been heightened, although it can be argued that the piece meal legislation is unacceptable and there needs to be some joined up thinking insofar as this area of law is concerned. Whilst the new legislation is a move in that direction, it is a wasted opportunity as it is certainly desirable that the law on domestic violence should be consolidated.

BPR Microfinance Institution in Indonesia

BPR Microfinance Institution in IndonesiaChapter 1Introduction1.1BackgroundIt is believed that microfinance helps scummy-income citizenry eacheviate their demeanor from poverty circumstances in umpteen developing countries. As an economical instrument which has been raised in the middle of s change surfaceties, the concept of microfinance came up from the fact that low-income race difficult to get at fiscal work from moneymaking(prenominal) or ball desireing intromission which may disadvantage them or even not including them as capableness clients. The reason is that, which often we may get word for some(prenominal) meters, low-income race omit of collateral for guarantee some touchstone of money they want, and in the mer ho engagetile fiscal originations point of view it is costly to take c argon them out-of-pocket to unequal cost-benefit and high transaction cost low-income batch tend to borrow in footling amount yet the commercial financial macroco sm briny(prenominal)tain high cost for processing and assuring their repayment. These costs atomic recite 18 not proportional with the amount of bring wedded to them.A ball microfinance institution existing in Indonesia is the depone Perkreditan Rakyat/BPR (Peoples accredit rim or artless Bank)1 which is launch by the Banking personation. The main accusive of the BPR is to exercise low linees2. It delegacy that BPRs stub enhance their portion and contribution in the development of micro and diminutive business3.In Indonesia, like early(a) developing countries, micro, petty(a) and medium enterprises (MSMEs)4 gambling signifi dirty dogt role in economy. The role of MSMEs butt joint be viewed as an important factor for Indonesia to recover from economic crisis and to lead economic growth and physical exercise. Statistics Indonesia (Badan Pusat Statistik/BPS) and Ministry of Cooperatives and humbleder-Medium Enterprises reported5 that, the come contribution o f SMEs sh be to total GDP Indonesia from the period of 2001 2007 was 60.77%, while at the self similar(prenominal) period rotund enterprises (LEs) contributed 39.23% which croupe be seen in Table 1. seeded playerStatistics Indonesia (BPS) and Ministry of Cooperatives and Small-Medium Enterprises (various editions)In cost of employment creation, MSM enterprises m opposite passed over large enterprises. Table 3 tolerates wee-weeer absorption by fictional characters of enterprises. It shows that small enterprises ease up absorbed some 91% of employment during 1999-2006, while medium and large enterprises befool provided by 5% and by 4% of employment in Indonesia.Source Cooperative Statistics cited in Nazara and Gitaharie (2008), edited by authorBased on the data which atomic number 18 discussed in the front para interprets, it merchant ship be concluded that micro, small and medium enterprises (MSMEs) have a big role and a potential as a driver of the domestic economy. N evertheless(prenominal), they still have several constraints, for example, product market admission priceibility, lack of management skills, and limited access to financial root words, especially from commercial banks, to meet their engage for finance. A survey conducted by Statistics Indonesia (BPS) concluded that the biggest problem for micro and small enterprises is lack of groovy for livelihood their business.The survey recognized thatproblem in finance for micro enterprises was accounted for 40.48%, while for small enterprises was 36.63% (Wardoyo and Prabowo 2003 31).In Indonesia, small and medium enterprises throne acquire their finance from several sources. agree to Nazara and Gitaharie (2008) which refer to statistical data from BPS 2000 82,960 SMEs got their finance from non banking financial institution 385,383 SMEs got their finance from banks and 661,630 SMEs got their finance from other sources. It is clearly from the data that most of SMEs rely on sources oth er than formal institutions. These figures were not taking into account for SMEs which have no legal entities (Nazara and Gitaharie 2008 8).From SMEs point of view, they face quirky administrative procedure and as well they have to provide collateral as guarantee to get gives from commercial banks. This specialize leads SMEs favoring in Bank Perkreditan Rakyat/BPR (Peoples quote Bank or boorish Bank) and other financial institutions which provide simpler in administrative procedures, but higher in touch rate comp bed to commercial banks (Nazara and Gitaharie 2008 8). dismantle though entrepreneurs be burdened with high interest rates, they do not very much complain well-nigh it as long as they have access to formal ac assent (Berry et al. 2001 as cited in (Sunarto 2007 2)).In delineate with the condition in which SMEs favoring in BPRs, Sunarto (Sunarto 2007 4) stated that BPRs have several advantages in serving to SMEs, those atomic number 18 (1) its location which i s virtually to SMEs, (2) simpler in credit procedures, (3) accentuate a personal approach in its work and (4) more(prenominal) than flexible.This topic is focused on the role and contribution of BPR, one of the formal theatrical roles of microfinance institutions in Indonesia, as the suppliers of bullion to dissimilar types of enterprises especially to micro and small. The discussion emphasizes on credit allotment delivered by BPRs to the micro, small and medium enterprises. Comparative compend go out be made amid commercial banks6 and BPRs for analytical purposes in both things. Firstly, the comparison in terms of allocation of credit which does not con spatial relationr other variables playing a role in borrowing, for instance interest rates and so on. The comparative result is not in the amount of the credit disbursed but in the percentage of allocation for each type of enterprise. Secondly, the comparison in terms of effect bequeath be discussed through some ind icators. Furthermore, the exercise indicators of BPRs will be compared with their criteria which set by Bank Indonesia to see whether those indicators improving or deteriorating.1.2 question Objective and question QuestionsResearch ObjectiveThe objective of this paper is to study the role and performance of Bank Perkreditan Rakyat (BPR), as one of microfinance institutions in Indonesia, in financing micro, small and medium enterprises.Research QuestionsIn order to achieve the look into objective, this paper proposes inquiry apparent motions as follows1.What is the role of BPRs as supplier of funds to various types of small and medium enterprises, in particular micro enterprises?2.What is the performance of BPRs in relation to credit formulation to micro and small enterprises?1.3Research guessBank Perkreditan Rakyat (BPR) was established with the main objective is to serve small- musical cuticle business and people in farming(prenominal) areas. on that pointfore, the num ber 1 hypothesis is that BPRs are reaching their main objective as supplier of funds to micro, small and medium enterprises as mandated by regulation (i.e., banking act). In order to meet the objectives, it is use uped good performances which are reflected from their performance indicators. Therefore, the piece hypothesis is that performance indicators of the BPRs have met with the standards which set by the Indonesia banking authority.1.4Organization of the PaperThis paper is divided into five chapters. Chapter 1 is introduction which contains priming of the research, research objective and research questions, research hypothesis, and organization of the paper. Chapter 2 is review of the literatures and analytical mannikin for the research. Literature reviews discuss nigh(predicate) definitions of microfinance and microfinance institution, the approaches can be interpreted by a microfinance institution in order to serve the clients, the models of microfinance institutions, th e types of microfinance institutions in Indonesia and the pyramid of them in relation to potential customers and performance indicators.analytical framework discusses about the way in which the research will be achieved. Chapter 3 is the microfinance institutions in Indonesia which contains their brief level and recent condition. Chapter 4 is analysis of the role of BPRs in financing micro, small and medium enterprises which contains overview of the chapter, data source for the analysis, methodology of the analysis, some information about commercial banks and BPRs, and analyzing to answer the research questions. Chapter 5 is conclusion.Chapter 2Literature examine and Analytical Framework2.1Literature roundThere are many definitions about microfinance proposed by several researchers and institutions. This paper uses some definitions given by Robinson, Ledgerwood, informative Group to Assist the Poor (CGAP), and Asia-Pacific sparing Co operating theatre (APEC) to describe microfi nance.Robinson (Robinson 2001 9) defined microfinance as small size financial function ( in general saving and credit) given to people who having recruit or fish or drove people who running micro or small enterprises which producing, recycle, repairing or selling goods people who offering run people who works for commissions or wages people who having earnings from renting the land, vehicles, draft animals, or machinery and equipment and people or other individuals and separates from both country-bred and urban areas at the local level from the developing countries. advisory Group to Assist the Poor (CGAP)7 which uses spoken communication short(p) people and Ledgerwood which uses terminology low-income clients pointed out to person who receives canonic financial services from microfinance including self-employed people.Furthermore, Ledgerwood (Ledgerwood 1999 1) stated that definition of microfinance comprises not nevertheless in financial intermediation but also in social intermediation. Many of microfinance institutions (MFIs)8 provide this social intermediation function (i.e., group arrangement, self-confidence development, training to enhance capabilities and to increase capacities in terms of financial literacy and managements) go along with financial intermediation. Moreover, she argued that microfinance is a development instrument and it is not estimable banking.Asia-Pacific Economic Cooperation (Santoso et al. 2005 7) defined microfinance into two understandings. Firstly, it refers to an institution when it designates to an organization which offer financial services or banking products, especially loans to the ridiculous people. Secondly, it uses for different methods or activities which assigned to the execrable people in order to access financial services. The poor people usually ask for loans, meanwhile commercial banks do not qualify them for loans. These understandings are close to each other. An institution which provides products f or poor people called as microfinance institution. The usage of products (i.e., credits) which is provided by MFIs will be respectable for poor people in generating more earnings.Ledgerwood (Ledgerwood 1999 65-66) stated that the approaches that can be done by microfinance institutions can be divided into two main categories the minimalist approach or integrated approach. When MFIs do minimalist approach, they only perform functions of financial intermediation, although sometimes they offer social intermediation in limited services. preface that underlie this approach is a-single missing pluck that can be offered by MFIs to the clients in the form of access to credit for them due to the clients are getting less coverage of services from financial institutions, for instance to grow enterprises. On the other hand, integrated approach is a combination of four aspects those are social and financial intermediation, enterprise development and social services. Thus, it is demand a holi stic view of the client when a MFI taking this approach. If MFIs are not able to meet all four services, MFIs only offer services that are really gather uped by the client as long as this service in line with goal and objective of MFIs.Since the large-scale demand for services microfinance activities is in existence, the activities are shown in many countries. The poor people are usually un-bankable, because of such conditions low skills, poor capacity and severe inabilities. They index not be served in the commercial banking system. It is because the system needs for formal requirements, along with the proper economic scale and certain guarantee. In official terms, this mannequin of market is un-named and un-served. There are niche markets for the supply of services for MFIs (Santoso et al. 2005 8).Clients of microfinance institution can not be sort out ad as the poorest of the poor. Generally, they are self-employed and low-income entrepreneur, including traders, diet vendor s at the street side, small farmers, small producers and artisan who produce souvenirs in at tourism area and so on. The nature of their business usually provides a stable source of income (Ledgerwood 1999 2).In various forms, income is provided by micro enterprises owned by the poor. This is done by providing employment. The recycling and repairing better than littering a good, making affordable food, clothing, and transportation to be available are some examples. It is also made to them who are from the low level of formal sector that are usually very difficult to live with their salaries. The people of this kind of life are often can cope with such a problem with the typical cases mentioned above, but can not handle the more serious problem. The other types of problem that are often found are neediness of capital, skill, official status, and business security. In the meantime, course they already have the ability to face sharp business sense, strong life skills, long hard work p ractice, market knowledge, extensive communication and free bread and butter networks. They also used to have the ability to live supported by their flexibility basic servant (Robinson 2001 12).A recent study in Bosnia and Herzegovina carried out by Hartarska and Nadolnyak (Hartarska and Nadolnyak 2008) used the financing constraint approach. The approach states that microenterprises that have good access to credit will be less rely on internal funding in their investment. Using the Living Standards Measurement Survey and the existence of the MFIs in their area, they compare aesthesia of investment to internal funds in the microenterprises which there are MFIs in municipalities they located to microenterprises which there is no MFIs in municipalities they located. They concluded that the MFIs reduce the constraint of microenterprises funding when they are exist close to business.There are some models of microfinance institutions. The stolon model is Grameen Bank. This model is founded in many countries, especially in Bangladesh, from which it established for the first time by Muhammad Junus. In find target poor clients, Grameen Bank will do it carefully which is usually done through a series of tests. Loans are given to the group in which each group typically consists of five people and each member of the group guarantee the loan of the other members. This model intensively requires supervision and want from the staff to the group borrowers.The second model is Village Bank. An implementing agency establish individual liquidation bank in concert with 30-50 people and sets capital for on-lending to other members. Repayments of the loan are usually in a week until 16 weeks whereas the village bank pays the principal plus interest to implementing agency. The third model is Credit Unions (CUs). Credit Unions are non-profit financial cooperatives which owned and controlled by its members. Besides saving, CU also provides loans for both productive and non-p roductive purposes to the members. The membership of CUs compared to Grameen Bank is more heterogeneous and usually base on similar bond.The fourth model is self-help groups (SHGs). This model is close to the second model, village bank, although their structure is less easy compared to the village bank.The membership of SHGs is based on the similarity in income and the number of membership approximately 20 people. In principle, they use internal funding, that is saving, to lend it to the members, even though they can also assay external funding as supererogatory source of funds. Several NGOs are facilitating and promoting SHGs, but basically, SHGs are directed as an independent institution. The task of seeking additional financing from out-of-door is usually helped by NGOs which link between SHGs and other external parties or other funding agencies. This NGOs job close related to social intermediary function they have, while other NGOs are functioned as financial intermediaries which funding SHGs(Conroy 2003 4-5).In terms of forms, microfinance institutions can be classified as bank (government and commercial), nonbank financial institution, saving and loan cooperative, credit union and nongovernmental organization. Pawnbrokers, rotating saving and credit association, and moneylender also part of MFIs and hold significant roles in functioning financial intermediation although they are more informal in legal status (Ledgerwood 1999 1).In Indonesia, several institutions have already served microfinance services for such a long period. Those institutions can be divided into four types. The first type is formal microfinance institutions (MFIs). This type of MFI is correct and supervised as banking institution and thereof their activities as financial intermediaries subject to banking regulation and supervision. Such institutions included in this type are BRI Unit (state-owned microbank), commercial banks with microfinance services and Rural Bank (Bank Perkr editan Rakyat/BPR).The second type is semi formal MFIs which registered and or licensed by state authorities or local governments, thus they are not regulated by banking authority (Bank Indonesia). Including in this type are cooperatives, Islamic-based cooperatives (Baitul Maal wat Tamwil/BMT), rural credit institution (Badan Kredit Desa/BKD) and microfinance owned and managed by NGOs. The third type is informal MFIs that operate outside the framework of government regulation, among others, are credit union, rotating credit and saving association (ROSCA), moneylenders, landlords and so on. The fourth type is microcredit programs established by the government in channeling credit to subsidize the poor through a variety of institutions (Nugroho 2008 181-182). Further explanation about these four microfinance services especially the first three types of MFIs will be presented in chapter 3.In Figure 1 we can see the pyramid of microfinance institutions with their potential customers i n Indonesia. The top layer shows formal MFIs (BRI Unit, Rural Banks/ BPRs and LDKPs). They provide financial services for the top level of microfinance market. This type of MFIs is intended to serve small business which has characterized with stable income flows therefore these MFIs potential clients are non-poor and not so poor people. In the middle layer, semi- formal MFIs serve microfinance services for the poor households. This layer includes rural credit institutions (Bank Kredit Desa/BKD), cooperatives, BMT and NGOs. Clients in this layer are characterized by unstable flow of income. At the bottom layer of the pyramid the huge number of potential clients which need microfinance services. They are very poor people which are characterized by unpredictable income. They need the microfinance services in order to ensure their uncertain income, so they need a small loan to get well the difficulties of life (Nugroho 2008 184-185).Figure 1 The gain of Microfinance Services in Indone siaSource BI and GTZ (2000) cited in Nugroho (2008)As mentioned above, Rural Bank (Bank Perkreditan Rakyat/BPR) is one of the formal types of microfinance in Indonesia. Its existence is established by Banking Act number 7 of 1992 as amended by Banking Act number 10 of 1998. The main goal of the rural bank is to serve small business and rural communities.In order to deliver their services to the customers, a microfinance institution requires a good performance. This performance can be seen from some indicators. Looking at these indicators, we can decide how well they not only can do financially but also it can also build the future performance goals. There are a large number of performance indicators that can be used by MFIs in measuring the financial performance.One of the principles that can be used is the CAMEL system, ACCION. This system examines five traditional aspects which are regarded as the most important thing in the practices of the financial intermediaries. The five aspe cts (capital adequacy, asset quality, management, earnings, and liquidity) be the sign of the financial condition and operational strength of the MFI in rough-cut (Ledgerwood 1999 205,227,229).2.2Analytical FrameworkBased on the theoretical framework that has been presented in the previous section, the author uses Figure 2 below describing the analytical framework used in the research which answering the research questions asked.There are two parties tortuous in the financial market.On one hand, there is a supply side which is financial institutions that act as financial intermediation agents or it competency be function as other than financial intermediation like social intermediation or something else. These financial institutions include commercial banks, non-banks financial institutions (insurances company, ventura capital, etc), and microfinance institutions (in different types and forms). On the other hand, on the demand side, there are some parties that require financing f or different purposes, among others for working capital and investment usage which is belongs to micro, small and medium enterprises (MSMEs).The problem is that not all of these financial institutions allow MSMEs as their client due to several requirements which can not be fulfilled by MSMEs (collateral and bureaucratic procedures, for instances) or it might be comes from the MSMEs itself that no need too much funds (small financing). Here, microfinance institutions fit with the need of MSMEs. The mechanism then runs as common supply and demand in the market MFIs, as financial intermediaries, offer credit or loan to MSMEs. Furthermore, MSMEs use the loan for running their operational activities (working capital usage) or for accumulating their physical capital (investment usage). At the end of the story, output of MSMEs will contribute to depicted object income (GDP) and at the same time generates income for the owners and employees.Figure 2 Analytical Framework of the Research Sup ply and Demand in Financial MarketSource authors graphThis paper focuses on the supply side of particular financial intermediaries in the financial market those are microfinance institutions. In other words, using Ledgerwoods terminology mentioned in literature review, the paper mainly looks at the role of MFIs in terms of minimalist approach how they perform as financial intermediations in delivering credit or loan. Special attention given to Rural Banks, one of formal MFIs in Indonesia in allocating their credit to different types of enterprises such as micro, small, medium and large enterprises.There are several reasons wherefore this paper discusses on Rural Banks as unit of analysis. Firstly, it is states in the regulation (Banking Act) that the main objective of Rural Banks is to serve small scale business and sounding into the pyramid of MFIs appeared in Figure 1. It means that Rural Banks have a specialization as small scale business banking, especially micro enterprises. This paper wants to see to which extent this mission is successfully executed. Secondly, Rural Banks are the second largest microfinance institutions in terms of asset, third company funds collected and number of debtors. According to Bank Indonesia (2008)9, they posses 35% of total MFIs assets 30.43% of third party funds collected on total MFIs and 29.15% of total number debtors on total MFIs.This study proposes two research questions. The first research question relates to the role of rural banks as financial intermediaries in delivering credit to different types of business especially micro and small enterprises. In addressing the first research question, the paper uses comparative analysis and simple calculations in terms of credit spending for both commercial banks and rural banks so that the share (percentage) of credit allocation to different types of enterprises to be known. In order to deem the result, some criteria and assumption are applied in the study. This is done du e to there is no data available about the definite amount of credit disbursed by either Rural Banks or commercial banks to different type of enterprises. The discussion focuses only on the amount of credit allocation, so that other variables that determine the credit such as interest rate, collateral, and so forth are not discussed in this study.The second research question indicates the performance indicators of rural banks in relation to credit provision to micro enterprises. These indicators include Loan to postulate Ratio (LDR), Returns on Assets Ratio (ROA) and Non-Performing Loan Ratio (NPL) which refer to Director of Bank Indonesia Decree number 30/12/Kep/Dir and Bank Indonesias garner No. 30/3/UPPB about Rural Banks Soundness Evaluation. Furthermore, comparison will be made between these indicators and criteria.Chapter 3Microfinance Institutions in Indonesia3.1Microfinance Institutions in IndonesiaAs developing country, Indonesia has long experience and history in developi ng microfinance institution which has made it possible for poor or low-income people to overcome financial constraints and to access financial institutions. For this condition, some researchers like Berenbach and Churchill called that Indonesia is the most developed market for microfinance services in the world (Barenbach and Churchill 1997 as cited in (Santoso et al. 2005 43)). The development of microfinance institution began for the first time in Dutch colonial era when several well-educated local people saw deteriorating economy happened in their community and they looked for the need of this services and started aim it. The two famous institutions best known as pioneer in microfinance institutions and exist since colonial era are cooperative and Bank Rakyat Indonesia (BRI).As mentioned in chapter 2, microfinance institutions in Indonesia can be classified into four types (Nugroho 2008), those are formal microfinance institutions, semiformal MFIs, informal MFIs and microcredit program which is established by the government for delivering credit to poor people through several institutions. In this chapter the latter type of MFI will not be discussed. The discussion is emphasizes on three other institutions. Formal MFIs are financial intermediary institutions which refer and subject to banking regulation and therefore supervised by Bank Indonesia. Semiformal MFIs are not regulated by Bank Indonesia as a banking authority, but they are licensed and or registered by other state authorities or local government. Informal MFIs operate outside government regulations.Nugroho (Nugroho 2008) described institutions which include in each type of MFI as follows formal MFIs including BRI Unit, Rural Bank (BPR) and The Rural Credit Fund Institutions (Lembaga Dana Kredit Pedesaan/LDKP) semiformal MFIs book binding rural credit institution (Badan Kredit Desa/ BKD), microfinance NGO, credit cooperatives including Islamic-based cooperatives (Baitul Maal wat Tamwil/BMT) inf ormal MFIs including credit unions, rotating credit and saving association (ROSCA), moneylenders, traders and landlords. Table 3.1 provides occasion of microfinance institutions by types in Indonesia in terms of units and their financial services.Bank Rakyat Indonesia UnitLembaga Dana Kredit Perdesaan (LDKP) The Rural Credit Fund InstitutionsThe Rural Credit Fund Institutions (LDKP) is the term of credit fund institution that operates in rural area, including a variety of non bank microfinance institutions with different names, ownership, organization, services and outreach, that was established on initiatives of provincial government. LDKP belongs to provincial, district or village government which, in their operation, have to obtain license from and was regulated by provincial government within the national regulatory framework. they get technical support and supervision from regional development bank (BPD) which are owned by provincial government.. since it was established in 1 970s, the number of LDKP getting less from 1978 to 630 in 2000, this cliff due to the conversion of LDKP to peoples cerdit banks(BPR) and recently only about one quarter of LDKPhave become banks.The BadanKredit Desa (BKD)BKD is a profitable and sustainable village level financial institution that provide financial services with a outreach to low income people. it was operated by a committee that controlled by head of village and have sustained the operation since colonial era. On behalf of Bank Indonesia, BRI severalise offices supervise and provide technical assistancefor BKD.in 1970s indonesian government did not pay much attention to this system. instead, the governmentgive more attention to the cooperative system. this make hard for BKD system to developed.in 1990s BRI tried to revive BKD by providing basic capital, improving administrative system and introducing bleak saving instruments, however, 1992 banking act burden the expanding BKD system. BKD is recognized as peoples credit bank (BPR) and has been operating as a licensed and regulated banksince 1992 banking act but the frame work setting, supervision and technical assistance has not changed since 2000.CooperativesHere, the brief history of cooperative in Indonesia refers to Santoso et al (2005) and Ministry of Cooperative, Small and Medium Enterprises website (www.depkop.go.id, 2009) as references. The thought of cooperative was delivered for the first time by Patih R. Aria Wiriatmaja at Purwokerto, a small town in Central Java, in 1896. Then, De Wolffvan Westerrode continued his efforts. In 1908, the year of national movement, Dr. Sutomo founded Budi Utomo which played a significant role for cooperatives improving the life of society.Then, Verordening op de Cooperatieve Vereeniging was established. Twelve years after that, in 1927, another(prenominal) type of cooperative called Regelling Inlandsche Cooperatieve was launched. In the same year, to develop bargaining power among local entrepreneur s, Islamic Trader Union (Serikat Dagang Islam) was established. Indonesian National Party (Partai Nasional Indonesia) which had activities in promoting cooperative spirit was established in 1929.3.2Bank Perkreditan Rakyat (BPR)Brief HistorySteinwand (Steinwand 2001) provided detail periodical history about Rural Bank. He divided the history into four parts of periods the evolution of the colonial BPR (1895-1945), the period from independence to financial sector reform (1945-1983), the period from financial sector reform to financial crisis (1983-1999) and at the present condition.Rural Bank assign in Financial System in IndonesiaChapter 4Analysis of the Role of Bank Perkreditan Rakyat (BPR) in Financing Micro, Small and Medium Enterprises4.1OverviewChapter 4 consists of 6 sections which each section aimed to answer the research questions. Section 1 is a general information about what will be discussed in this chapter section 2 discusses about the source of the data used in the anal ysis section 3 is the methodology section 4 is about overview the condition of Bank Perkreditan Rakyat (BPRs) and commercial banks (CBs) in Indonesia using selected indicators, third party funds and credits section 5 tries to reply the first research question by using comparative analysis between commercial banks and BPRs and section 6 is the last section which answering the second research question about the performance indicators ofBPR Microfinance Institution in IndonesiaBPR Microfinance Institution in IndonesiaChapter 1Introduction1.1BackgroundIt is believed that microfinance helps low-income people alleviate their life from poverty circumstances in many developing countries. As an economic instrument which has been raised in the middle of seventies, the thought of microfinance came up from the fact that low-income people difficult to access financial services from commercial or formal banking institution which may disadvantage them or even not including them as potential client s. The reason is that, which often we may hear for several times, low-income people lack of collateral for guarantee some amount of money they want, and in the commercial financial institutions point of view it is costly to serve them due to unequal cost-benefit and high transaction cost low-income people tend to borrow in small amount but the commercial financial institution maintain high cost for processing and assuring their repayment. These costs are not proportional with the amount of loan given to them.A formal microfinance institution existing in Indonesia is the Bank Perkreditan Rakyat/BPR (Peoples Credit Bank or Rural Bank)1 which is established by the Banking Act. The main objective of the BPR is to serve small businesses2. It means that BPRs can enhance their role and contribution in the development of micro and small business3.In Indonesia, like other developing countries, micro, small and medium enterprises (MSMEs)4 play significant role in economy. The role of MSMEs ca n be viewed as an important factor for Indonesia to recover from economic crisis and to lead economic growth and employment. Statistics Indonesia (Badan Pusat Statistik/BPS) and Ministry of Cooperatives and Small-Medium Enterprises reported5 that, the average contribution of SMEs share to total GDP Indonesia from the period of 2001 2007 was 60.77%, while at the same period large enterprises (LEs) contributed 39.23% which can be seen in Table 1.SourceStatistics Indonesia (BPS) and Ministry of Cooperatives and Small-Medium Enterprises (various editions)In terms of employment creation, MSM enterprises have passed over large enterprises. Table 3 provides worker absorption by types of enterprises. It shows that small enterprises have absorbed approximately 91% of employment during 1999-2006, while medium and large enterprises have provided by 5% and by 4% of employment in Indonesia.Source Cooperative Statistics cited in Nazara and Gitaharie (2008), edited by authorBased on the data whic h are discussed in the previous paragraphs, it can be concluded that micro, small and medium enterprises (MSMEs) have a big role and a potential as a driver of the domestic economy. Nevertheless, they still have several constraints, for instance, product market accessibility, lack of management skills, and limited access to financial sources, especially from commercial banks, to meet their demand for finance. A survey conducted by Statistics Indonesia (BPS) concluded that the biggest problem for micro and small enterprises is lack of capital for financing their business.The survey recognized thatproblem in finance for micro enterprises was accounted for 40.48%, while for small enterprises was 36.63% (Wardoyo and Prabowo 2003 31).In Indonesia, small and medium enterprises can acquire their finance from several sources. According to Nazara and Gitaharie (2008) which refer to statistical data from BPS 2000 82,960 SMEs got their finance from non banking financial institution 385,383 SME s got their finance from banks and 661,630 SMEs got their finance from other sources. It is clearly from the data that most of SMEs rely on sources other than formal institutions. These figures were not taking into account for SMEs which have no legal entities (Nazara and Gitaharie 2008 8).From SMEs point of view, they face kinky administrative procedure and also they have to provide collateral as guarantee to get loans from commercial banks. This condition leads SMEs favoring in Bank Perkreditan Rakyat/BPR (Peoples Credit Bank or Rural Bank) and other financial institutions which provide simpler in administrative procedures, but higher in interest rates compared to commercial banks (Nazara and Gitaharie 2008 8). Even though entrepreneurs are burdened with high interest rates, they do not much complain about it as long as they have access to formal credit (Berry et al. 2001 as cited in (Sunarto 2007 2)).In line with the condition in which SMEs favoring in BPRs, Sunarto (Sunarto 2007 4) stated that BPRs have several advantages in serving to SMEs, those are (1) its location which is close to SMEs, (2) simpler in credit procedures, (3) accentuate a personal approach in its services and (4) more flexible.This paper is focused on the role and contribution of BPR, one of the formal types of microfinance institutions in Indonesia, as the suppliers of funds to different types of enterprises especially to micro and small. The discussion emphasizes on credit allocation delivered by BPRs to the micro, small and medium enterprises. Comparative analysis will be made between commercial banks6 and BPRs for analytical purposes in two things. Firstly, the comparison in terms of allocation of credit which does not consider other variables playing a role in borrowing, for instance interest rates and so on. The comparative result is not in the amount of the credit disbursed but in the percentage of allocation for each type of enterprise. Secondly, the comparison in terms of perfo rmance will be discussed through some indicators. Furthermore, the performance indicators of BPRs will be compared with their criteria which set by Bank Indonesia to see whether those indicators improving or deteriorating.1.2Research Objective and Research QuestionsResearch ObjectiveThe objective of this paper is to study the role and performance of Bank Perkreditan Rakyat (BPR), as one of microfinance institutions in Indonesia, in financing micro, small and medium enterprises.Research QuestionsIn order to achieve the research objective, this paper proposes research questions as follows1.What is the role of BPRs as supplier of funds to different types of small and medium enterprises, in particular micro enterprises?2.What is the performance of BPRs in relation to credit provision to micro and small enterprises?1.3Research HypothesisBank Perkreditan Rakyat (BPR) was established with the main objective is to serve small-scale business and people in rural areas. Therefore, the first hy pothesis is that BPRs are reaching their main objective as supplier of funds to micro, small and medium enterprises as mandated by regulation (i.e., banking act). In order to meet the objectives, it is needed good performances which are reflected from their performance indicators. Therefore, the second hypothesis is that performance indicators of the BPRs have met with the standards which set by the Indonesia banking authority.1.4Organization of the PaperThis paper is divided into five chapters. Chapter 1 is introduction which contains background of the research, research objective and research questions, research hypothesis, and organization of the paper. Chapter 2 is review of the literatures and analytical framework for the research. Literature reviews discuss about definitions of microfinance and microfinance institution, the approaches can be taken by a microfinance institution in order to serve the clients, the models of microfinance institutions, the types of microfinance ins titutions in Indonesia and the pyramid of them in relation to potential customers and performance indicators.Analytical framework discusses about the way in which the research will be achieved. Chapter 3 is the microfinance institutions in Indonesia which contains their brief history and recent condition. Chapter 4 is analysis of the role of BPRs in financing micro, small and medium enterprises which contains overview of the chapter, data source for the analysis, methodology of the analysis, some information about commercial banks and BPRs, and analyzing to answer the research questions. Chapter 5 is conclusion.Chapter 2Literature Review and Analytical Framework2.1Literature ReviewThere are many definitions about microfinance proposed by several researchers and institutions. This paper uses some definitions given by Robinson, Ledgerwood, Consultative Group to Assist the Poor (CGAP), and Asia-Pacific Economic Cooperation (APEC) to describe microfinance.Robinson (Robinson 2001 9) defi ned microfinance as small size financial services (mainly saving and credit) given to people who having farm or fish or herd people who running micro or small enterprises which producing, recycling, repairing or selling goods people who offering services people who working for commissions or wages people who having earnings from renting the land, vehicles, draft animals, or machinery and equipment and people or other individuals and groups from both rural and urban areas at the local level from the developing countries.Consultative Group to Assist the Poor (CGAP)7 which uses terminology poor people and Ledgerwood which uses terminology low-income clients pointed out to person who receives basic financial services from microfinance including self-employed people.Furthermore, Ledgerwood (Ledgerwood 1999 1) stated that definition of microfinance comprises not only in financial intermediation but also in social intermediation. Many of microfinance institutions (MFIs)8 provide this socia l intermediation function (i.e., group arrangement, self-confidence development, training to enhance capabilities and to increase capacities in terms of financial literacy and managements) go along with financial intermediation. Moreover, she argued that microfinance is a development instrument and it is not just banking.Asia-Pacific Economic Cooperation (Santoso et al. 2005 7) defined microfinance into two understandings. Firstly, it refers to an institution when it designates to an organization which offer financial services or banking products, especially loans to the poor people. Secondly, it uses for different methods or activities which assigned to the poor people in order to access financial services. The poor people usually ask for loans, meanwhile commercial banks do not qualify them for loans. These understandings are close to each other. An institution which provides products for poor people called as microfinance institution. The usage of products (i.e., credits) which i s provided by MFIs will be beneficial for poor people in generating more earnings.Ledgerwood (Ledgerwood 1999 65-66) stated that the approaches that can be done by microfinance institutions can be divided into two main categories the minimalist approach or integrated approach. When MFIs do minimalist approach, they only perform functions of financial intermediation, although sometimes they offer social intermediation in limited services. Premise that underlie this approach is a-single missing piece that can be offered by MFIs to the clients in the form of access to credit for them due to the clients are getting less coverage of services from financial institutions, for instance to grow enterprises. On the other hand, integrated approach is a combination of four aspects those are social and financial intermediation, enterprise development and social services. Thus, it is needed a holistic view of the client when a MFI taking this approach. If MFIs are not able to meet all four servic es, MFIs only offer services that are really needed by the client as long as this service in line with goal and objective of MFIs.Since the large-scale demand for services microfinance activities is in existence, the activities are shown in many countries. The poor people are usually un-bankable, because of such conditions low skills, poor capacity and severe inabilities. They might not be served in the commercial banking system. It is because the system needs for formal requirements, along with the proper economic scale and certain guarantee. In official terms, this kind of market is un-named and un-served. There are niche markets for the supply of services for MFIs (Santoso et al. 2005 8).Clients of microfinance institution can not be classified as the poorest of the poor. Generally, they are self-employed and low-income entrepreneur, including traders, food vendors at the street side, small farmers, small producers and artisan who produce souvenirs in at tourism area and so on. T he nature of their business usually provides a stable source of income (Ledgerwood 1999 2).In various forms, income is provided by micro enterprises owned by the poor. This is done by providing employment. The recycling and repairing better than littering a good, making cheap food, clothing, and transportation to be available are some examples. It is also made to them who are from the low level of formal sector that are usually very difficult to live with their salaries. The people of this kind of life are often can cope with such a problem with the typical cases mentioned above, but can not handle the more serious problem. The other types of problem that are often found are deficiency of capital, skill, official status, and business security. In the meantime, naturally they already have the ability to face sharp business sense, strong life skills, long hard work practice, market knowledge, extensive communication and informal support networks. They also used to have the ability to live supported by their flexibility basic consideration (Robinson 2001 12).A recent study in Bosnia and Herzegovina carried out by Hartarska and Nadolnyak (Hartarska and Nadolnyak 2008) used the financing constraint approach. The approach states that microenterprises that have good access to credit will be less rely on internal funding in their investment. Using the Living Standards Measurement Survey and the existence of the MFIs in their area, they compare sensitivity of investment to internal funds in the microenterprises which there are MFIs in municipalities they located to microenterprises which there is no MFIs in municipalities they located. They concluded that the MFIs reduce the constraint of microenterprises funding when they are exist close to business.There are some models of microfinance institutions. The first model is Grameen Bank. This model is founded in many countries, especially in Bangladesh, from which it established for the first time by Muhammad Junus. In det ermining target poor clients, Grameen Bank will do it carefully which is usually done through a series of tests. Loans are given to the group in which each group typically consists of five people and each member of the group guarantee the loan of the other members. This model intensively requires supervision and motivation from the staff to the group borrowers.The second model is Village Bank. An implementing agency establish individual village bank together with 30-50 people and sets capital for on-lending to other members. Repayments of the loan are usually in a week until 16 weeks whereas the village bank pays the principal plus interest to implementing agency. The third model is Credit Unions (CUs). Credit Unions are non-profit financial cooperatives which owned and controlled by its members. Besides saving, CU also provides loans for both productive and non-productive purposes to the members. The membership of CUs compared to Grameen Bank is more heterogeneous and usually based on similar bond.The fourth model is self-help groups (SHGs). This model is close to the second model, village bank, although their structure is less well compared to the village bank.The membership of SHGs is based on the similarity in income and the number of membership approximately 20 people. In principle, they use internal funding, that is saving, to lend it to the members, even though they can also seek external funding as additional source of funds. Several NGOs are facilitating and promoting SHGs, but basically, SHGs are directed as an independent institution. The task of seeking additional financing from outside is usually helped by NGOs which link between SHGs and other external parties or other funding agencies. This NGOs job close related to social intermediary function they have, while other NGOs are functioned as financial intermediaries which funding SHGs(Conroy 2003 4-5).In terms of forms, microfinance institutions can be classified as bank (government and commercial ), nonbank financial institution, saving and loan cooperative, credit union and nongovernmental organization. Pawnbrokers, rotating saving and credit association, and moneylender also part of MFIs and hold significant roles in functioning financial intermediation although they are more informal in legal status (Ledgerwood 1999 1).In Indonesia, several institutions have already served microfinance services for such a long period. Those institutions can be divided into four types. The first type is formal microfinance institutions (MFIs). This type of MFI is regulated and supervised as banking institution and therefore their activities as financial intermediaries subject to banking regulation and supervision. Such institutions included in this type are BRI Unit (state-owned microbank), commercial banks with microfinance services and Rural Bank (Bank Perkreditan Rakyat/BPR).The second type is semi formal MFIs which registered and or licensed by state authorities or local governments, t herefore they are not regulated by banking authority (Bank Indonesia). Including in this type are cooperatives, Islamic-based cooperatives (Baitul Maal wat Tamwil/BMT), rural credit institution (Badan Kredit Desa/BKD) and microfinance owned and managed by NGOs. The third type is informal MFIs that operate outside the framework of government regulation, among others, are credit union, rotating credit and saving association (ROSCA), moneylenders, landlords and so on. The fourth type is microcredit programs established by the government in channeling credit to subsidize the poor through a variety of institutions (Nugroho 2008 181-182). Further explanation about these four microfinance services especially the first three types of MFIs will be presented in chapter 3.In Figure 1 we can see the pyramid of microfinance institutions with their potential customers in Indonesia. The top layer shows formal MFIs (BRI Unit, Rural Banks/ BPRs and LDKPs). They provide financial services for the top level of microfinance market. This type of MFIs is intended to serve small business which has characterized with stable income flows therefore these MFIs potential clients are non-poor and not so poor people. In the middle layer, semi- formal MFIs serve microfinance services for the poor households. This layer includes rural credit institutions (Bank Kredit Desa/BKD), cooperatives, BMT and NGOs. Clients in this layer are characterized by unstable flow of income. At the bottom layer of the pyramid the huge number of potential clients which need microfinance services. They are very poor people which are characterized by unpredictable income. They need the microfinance services in order to ensure their uncertain income, so they need a small loan to overcome the difficulties of life (Nugroho 2008 184-185).Figure 1 The Pyramid of Microfinance Services in IndonesiaSource BI and GTZ (2000) cited in Nugroho (2008)As mentioned above, Rural Bank (Bank Perkreditan Rakyat/BPR) is one of the fo rmal types of microfinance in Indonesia. Its existence is established by Banking Act number 7 of 1992 as amended by Banking Act number 10 of 1998. The main goal of the rural bank is to serve small business and rural communities.In order to deliver their services to the customers, a microfinance institution requires a good performance. This performance can be seen from some indicators. Looking at these indicators, we can decide how well they not only can do financially but also it can also build the future performance goals. There are a large number of performance indicators that can be used by MFIs in measuring the financial performance.One of the principles that can be used is the CAMEL system, ACCION. This system examines five traditional aspects which are regarded as the most important thing in the practices of the financial intermediaries. The five aspects (capital adequacy, asset quality, management, earnings, and liquidity) be the sign of the financial condition and operationa l strength of the MFI in common (Ledgerwood 1999 205,227,229).2.2Analytical FrameworkBased on the theoretical framework that has been presented in the previous section, the author uses Figure 2 below describing the analytical framework used in the research which answering the research questions asked.There are two parties involved in the financial market.On one hand, there is a supply side which is financial institutions that act as financial intermediation agents or it might be function as other than financial intermediation like social intermediation or something else. These financial institutions include commercial banks, non-banks financial institutions (insurances company, ventura capital, etc), and microfinance institutions (in different types and forms). On the other hand, on the demand side, there are some parties that require financing for different purposes, among others for working capital and investment usage which is belongs to micro, small and medium enterprises (MSMEs ).The problem is that not all of these financial institutions allow MSMEs as their client due to several requirements which can not be fulfilled by MSMEs (collateral and bureaucratic procedures, for instances) or it might be comes from the MSMEs itself that no need too much funds (small financing). Here, microfinance institutions fit with the need of MSMEs. The mechanism then runs as common supply and demand in the market MFIs, as financial intermediaries, offer credit or loan to MSMEs. Furthermore, MSMEs use the loan for running their operational activities (working capital usage) or for accumulating their physical capital (investment usage). At the end of the story, output of MSMEs will contribute to national income (GDP) and at the same time generates income for the owners and employees.Figure 2 Analytical Framework of the Research Supply and Demand in Financial MarketSource authors graphThis paper focuses on the supply side of particular financial intermediaries in the financial market those are microfinance institutions. In other words, using Ledgerwoods terminology mentioned in literature review, the paper mainly looks at the role of MFIs in terms of minimalist approach how they perform as financial intermediations in delivering credit or loan. Special attention given to Rural Banks, one of formal MFIs in Indonesia in allocating their credit to different types of enterprises such as micro, small, medium and large enterprises.There are several reasons why this paper discusses on Rural Banks as unit of analysis. Firstly, it is states in the regulation (Banking Act) that the main objective of Rural Banks is to serve small scale business and looking into the pyramid of MFIs appeared in Figure 1. It means that Rural Banks have a specialization as small scale business banking, especially micro enterprises. This paper wants to see to which extent this mission is successfully executed. Secondly, Rural Banks are the second largest microfinance institutions in ter ms of asset, third party funds collected and number of debtors. According to Bank Indonesia (2008)9, they posses 35% of total MFIs assets 30.43% of third party funds collected on total MFIs and 29.15% of total number debtors on total MFIs.This study proposes two research questions. The first research question relates to the role of rural banks as financial intermediaries in delivering credit to different types of business especially micro and small enterprises. In addressing the first research question, the paper uses comparative analysis and simple calculations in terms of credit disbursement for both commercial banks and rural banks so that the share (percentage) of credit allocation to different types of enterprises to be known. In order to obtain the result, some criteria and assumption are applied in the study. This is done due to there is no data available about the definite amount of credit disbursed by either Rural Banks or commercial banks to different type of enterprises. The discussion focuses only on the amount of credit allocation, so that other variables that determine the credit such as interest rate, collateral, and so forth are not discussed in this study.The second research question indicates the performance indicators of rural banks in relation to credit provision to micro enterprises. These indicators include Loan to Deposit Ratio (LDR), Returns on Assets Ratio (ROA) and Non-Performing Loan Ratio (NPL) which refer to Director of Bank Indonesia Decree number 30/12/Kep/Dir and Bank Indonesias Letter No. 30/3/UPPB about Rural Banks Soundness Evaluation. Furthermore, comparison will be made between these indicators and criteria.Chapter 3Microfinance Institutions in Indonesia3.1Microfinance Institutions in IndonesiaAs developing country, Indonesia has long experience and history in developing microfinance institution which has made it possible for poor or low-income people to overcome financial constraints and to access financial institutions. F or this condition, some researchers like Berenbach and Churchill called that Indonesia is the most developed market for microfinance services in the world (Barenbach and Churchill 1997 as cited in (Santoso et al. 2005 43)). The development of microfinance institution began for the first time in Dutch colonial era when several well-educated local people saw deteriorating economy happened in their community and they looked for the need of this services and started organize it. The two famous institutions best known as pioneer in microfinance institutions and exist since colonial era are cooperative and Bank Rakyat Indonesia (BRI).As mentioned in chapter 2, microfinance institutions in Indonesia can be classified into four types (Nugroho 2008), those are formal microfinance institutions, semiformal MFIs, informal MFIs and microcredit program which is established by the government for delivering credit to poor people through several institutions. In this chapter the latter type of MFI w ill not be discussed. The discussion is emphasizes on three other institutions. Formal MFIs are financial intermediary institutions which refer and subject to banking regulation and therefore supervised by Bank Indonesia. Semiformal MFIs are not regulated by Bank Indonesia as a banking authority, but they are licensed and or registered by other state authorities or local government. Informal MFIs operate outside government regulations.Nugroho (Nugroho 2008) described institutions which include in each type of MFI as follows formal MFIs including BRI Unit, Rural Bank (BPR) and The Rural Credit Fund Institutions (Lembaga Dana Kredit Pedesaan/LDKP) semiformal MFIs covering rural credit institution (Badan Kredit Desa/ BKD), microfinance NGO, credit cooperatives including Islamic-based cooperatives (Baitul Maal wat Tamwil/BMT) informal MFIs including credit unions, rotating credit and saving association (ROSCA), moneylenders, traders and landlords. Table 3.1 provides map of microfinance institutions by types in Indonesia in terms of units and their financial services.Bank Rakyat Indonesia UnitLembaga Dana Kredit Perdesaan (LDKP) The Rural Credit Fund InstitutionsThe Rural Credit Fund Institutions (LDKP) is the term of credit fund institution that operates in rural area, including a variety of non bank microfinance institutions with different names, ownership, organization, services and outreach, that was established on initiatives of provincial government. LDKP belongs to provincial, district or village government which, in their operation, have to obtain license from and was regulated by provincial government within the national regulatory framework. they get technical support and supervision from regional development bank (BPD) which are owned by provincial government.. since it was established in 1970s, the number of LDKP getting less from 1978 to 630 in 2000, this decrease due to the conversion of LDKP to peoples cerdit banks(BPR) and recently only about one q uarter of LDKPhave become banks.The BadanKredit Desa (BKD)BKD is a profitable and sustainable village level financial institution that provide financial services with a outreach to low income people. it was operated by a committee that controlled by head of village and have sustained the operation since colonial era. On behalf of Bank Indonesia, BRI branch offices supervise and provide technical assistancefor BKD.in 1970s indonesian government did not pay much attention to this system. instead, the governmentgive more attention to the cooperative system. this make hard for BKD system to developed.in 1990s BRI tried to revive BKD by providing basic capital, improving administrative system and introducing new saving instruments, however, 1992 banking act burden the expanding BKD system. BKD is recognized as peoples credit bank (BPR) and has been operating as a licensed and regulated banksince 1992 banking act but the frame work setting, supervision and technical assistance has not cha nged since 2000.CooperativesHere, the brief history of cooperative in Indonesia refers to Santoso et al (2005) and Ministry of Cooperative, Small and Medium Enterprises website (www.depkop.go.id, 2009) as references. The thought of cooperative was delivered for the first time by Patih R. Aria Wiriatmaja at Purwokerto, a small town in Central Java, in 1896. Then, De Wolffvan Westerrode continued his efforts. In 1908, the year of national movement, Dr. Sutomo founded Budi Utomo which played a significant role for cooperatives improving the life of society.Then, Verordening op de Cooperatieve Vereeniging was established. Twelve years after that, in 1927, another type of cooperative called Regelling Inlandsche Cooperatieve was launched. In the same year, to develop bargaining power among local entrepreneurs, Islamic Trader Union (Serikat Dagang Islam) was established. Indonesian National Party (Partai Nasional Indonesia) which had activities in promoting cooperative spirit was establish ed in 1929.3.2Bank Perkreditan Rakyat (BPR)Brief HistorySteinwand (Steinwand 2001) provided detail periodical history about Rural Bank. He divided the history into four parts of periods the evolution of the colonial BPR (1895-1945), the period from independence to financial sector reform (1945-1983), the period from financial sector reform to financial crisis (1983-1999) and at the present condition.Rural Bank Position in Financial System in IndonesiaChapter 4Analysis of the Role of Bank Perkreditan Rakyat (BPR) in Financing Micro, Small and Medium Enterprises4.1OverviewChapter 4 consists of 6 sections which each section aimed to answer the research questions. Section 1 is a general information about what will be discussed in this chapter section 2 discusses about the source of the data used in the analysis section 3 is the methodology section 4 is about overview the condition of Bank Perkreditan Rakyat (BPRs) and commercial banks (CBs) in Indonesia using selected indicators, third party funds and credits section 5 tries to reply the first research question by using comparative analysis between commercial banks and BPRs and section 6 is the last section which answering the second research question about the performance indicators of

Essay --

Poverty and Culture One of the common liberal claim is that on the whole the poor are just same(p) every wiz else except that they have less money. Anonymous The Poverty Poverty is hunger, Poverty is lack of shelter, and Poverty is being sick and not being able to advert a doctor. Poverty is not being able to go to school and not knowing how to read. Poverty is not having a job, is fear for the future, living one day at a time. Poverty is losing a child to illness brought most by contaminated water. Poverty is powerlessness, lack of representation and freedom. Poverty has some faces, changing from place to place and across time, and has been described in many ways. More often, scantiness is a situation people want to escape. So poverty is a call to action for the poor and the wealthy alike. This is a call to change the world so that many to a greater extent may have affluent to eat, adequate shelter, access to education and health, protection from violence, and a voice in what happens in their communities. As poverty has many dimensions, it has to be looked at through a variety of indicators, levels of income and consumption, social indicators, and now increasingly indicators of vulnerability to risks and of socio/political access. Culture Culture of any land or nation can tell us about its way of living, standards, priorities, attitudes, styles, and behaviors. Culture of any society can completed in decades or even centuries, we cannot change it rapidly. We here can discuss about the Culture of Poverty, how it is cultivated, and what factors can influence to this Poverty Culture. Influential factors There are many factors playing a much major role in the deficiency (not able to compete) rather than we can only talk about literacy of any nation/country... ... up with this tremendous population explosion. So far, much more work has been done using consumption or income-based measures of poverty some work also has been done on non-income dimensio ns of poverty, but we should have to consider all aspects of poverty and dont need to stick over certain area. References Free-TermPapers_com - Poverty Point Culture- http//www.free-termpapers.com/tp/4/alx55.shtml WELFARE AND THE CULTURE OF POVERTY- http//www.cato.org/pubs/journal/cj16n1-1.html The Culture Of Poverty- http//www.washingtonpost.com/wp-srv/ political sympathies/special/welfare/stories/op043097.htm Is Poverty a Culture- http//arnolds.dhs.org/geography/geo_forum/1014604806/index_html Article Why Are We Poor- http//www.scar.utoronto.ca/faces/CurrentViews/whypoor.html The New York Review of Books CULTURE OF POVERTY- http//www.nybooks.com/articles/11702

DBQ 1820s 1830s Essay -- essays research papers

For quite some time Americans have been led to believe that during the 1820s and 30s, capital of Mississippiian Democrats were the guardians of the people, and worked to improve the nation for the people. The truth remains, however, that during this period, President Jackson vetoed a bill to recharter the avow of the United States of America, infringed on the rights of Native Americans, used brute force to bring Southerners under submission during the Tariff of 1832. He enacted the Spoils corpse which did not guarantee the best leadership, and was morally corrupt. Although the nations economy and political democracy flourished during the reign of President Jackson, constitutional rights, equal opportunity and individualistic liberties were discouraged. In her 1834 visit to America, british author Harriet Martineau wrote of the nations economy being strong and properous. The absence of poverty and ignorance and independence of every man argon some of the observations she recorded (D). The national economy did in fact boom during the 1820s and early 30s. With Samuel Slaters introduction of the Factory System to America, and Eli Whitneys cotton Gin, the United States speed in manufacturing textiles increased rapidly. In 1837, however, America experienced a tremendous financial depression. Bad land speculation, and the fall of the Federal Bank (due to Jacksons failure to recharter the Bank in 1832) were the two main factors that caused the financial crisis. ...

James Joyces Araby - An Analysis of Araby :: Joyce Dubliners Araby Essays

An Analysis of Joyces Araby Araby is a short complex story by Joyce that I turn over is a reflection of his own life as a boy growing up in capital of Ireland. Joyce uses the voice of a young boy as a narrator however the narrator seems much more mature then the boy in the story. The story focuses on lack and reverie about darkness, despair, and enlightenment and I believe it is a retrospective of Joyces look back at life and the constant struggle between ideals and reality. I believe Araby employs many themes the two most app arent to me are escape and fantasy though I see signs of religion and a boys first love. Araby is an attempt by the boy to escape the bleak darkness of North Richmond Street. Joyce orchestrates an attempt to escape the short days of winter, where night falls early and streetlights are but feeble lanterns failing miserably to light the somberness of the dark muddy lanes(Joyce 38). Metaphorically, Joyce calls the street blind, a dead end much like Dublin itse lf in the mid 1890s when Joyce lived on North Richmond Street as a young boy. A recurrent theme of darkness weaves itself finished the story the boy hides in shadows from his uncle or to coyly catch a glimpse of his friend Mangans sister who obliviously is his first love.Araby is about escaping into the world of fantasy. The narrator is mistaken with his friends sister he hides in the shadows, peering secluded from a distance trying to spy her brown figure(Joyce 38). She is the light in his fantasy, someone who will trick up him out of darkness. I see many parallels to my life as a boy growing up in the inner city of Jersey City. We looked for escape also, a trip uptown to Lincoln Park, or take a train ride to New York City where we would gaze at the beauties on seventh Ave. The boy sees the bazaar at Araby as an opportunity to win her over, as a way to light the candle in her eyes. However, the boy is more muggy then shy, his adolescence is an impediment to his quest and he los t for words to speak. I vividly recall those times in my young life, driven by desires and try with the lack of experience to get through the moment. He fantasizes about her, how bringing her a gift from the bazaar will capture her heart.

Genetically Modified Organisms: The European Union vs. The United State

genetically change Organisms The European Union vs. The linked States By increasing the fertility of the land, it increases its abundance. The improvements of agriculture too introduce many sorts of vegetable foods, which, requiring less land and not more than labor than corn, come cheaply to the market.-Adam Smith, An doubt into the Nature and Causes of the Wealth of NationsBook I.XI.nThe United States and the European Union are currently in dispute over the trade of genetically modify organisms. These adapted plants produce more fruit per acre than traditional methods of farming while protecting the species from insects, environmental changes, and mutations. The output coupled with the benefits of environmental protection yield break dance products at a cheaper price for consumers. Adam Smith would favor the technologies of genetic modification because the fertility of the land increases, as well as its abundance. This growth results in more agricultural products on the marke t that require less land for cultivation, and no increase in labor. The consumer is then presented with a cheaper price because there eliminates the pauperisation to grow great labor costs and, at times, crop protection inputs much(prenominal) as pesticides. The European Union should allow these products to enter their market freely, to permit the utmost gain to EU consumers. BIOTECHNOLOGYWhat is a GMO?GMO stands for a genetically modified organism. A GMO is artificially developed by scientists to produce circumstantial results such as sustain life through a drought or produce a greater quantity of fruit per plant (Monsanto peck1999). This recitation began centuries ago when plants and animals were selectively bred and microorganisms were us... ...ld dominate trade talks. Voice of Agriculture. http//www.fb.orgSmith, Adam. 1981 1776. An Inquiry Into the Nature and Causes of the Wealth of Nations. Indianapolis, Indiana Liberty Press.Trans-Atlantic Business Dialouge. 1998. Agr i-Foods Biotechnology Group get ahead piece of music and Summary of Findings. http//www.eabc.org/progress.htmThe United States Department of Agriculture. 1998. Biotechnology. http//www.useu.be/AGRI/biotech.htmlThe United States Mission to the European Union. 1999. EU Committee Accepts Two Labeling Proposals For Biotech Food. http//www.useu.be__________. 1999. USTR Official Position on Biotechnology and Trade. http//www.useu.be__________. 1998. Genetically Modified Organisms. http//www.useu.beWambugu, Florence. 1999. Why Africa needs agricultural biotech. Nature. Volume 400. http//www.nature.com Genetically Modified Organisms The European Union vs. The United StateGenetically Modified Organisms The European Union vs. The United States By increasing the fertility of the land, it increases its abundance. The improvements of agriculture too introduce many sorts of vegetable foods, which, requiring less land and not more labor than corn, come cheaply to the market.-Adam Smith, An Inquiry into the Nature and Causes of the Wealth of NationsBook I.XI.nThe United States and the European Union are currently in dispute over the trade of genetically modified organisms. These altered plants produce more fruit per acre than traditional methods of farming while protecting the species from insects, environmental changes, and mutations. The output coupled with the benefits of environmental protection yield better products at a cheaper price for consumers. Adam Smith would favor the technologies of genetic modification because the fertility of the land increases, as well as its abundance. This growth results in more agricultural products on the market that require less land for cultivation, and no increase in labor. The consumer is then presented with a cheaper price because there eliminates the need to incur great labor costs and, at times, crop protection inputs such as pesticides. The European Union should allow these products to enter their market freely, to provide the maximum gain to EU consumers. BIOTECHNOLOGYWhat is a GMO?GMO stands for a genetically modified organism. A GMO is artificially developed by scientists to produce specific results such as sustain life through a drought or produce a greater quantity of fruit per plant (Monsanto Corporation1999). This practice began centuries ago when plants and animals were selectively bred and microorganisms were us... ...ld dominate trade talks. Voice of Agriculture. http//www.fb.orgSmith, Adam. 1981 1776. An Inquiry Into the Nature and Causes of the Wealth of Nations. Indianapolis, Indiana Liberty Press.Trans-Atlantic Business Dialouge. 1998. Agri-Foods Biotechnology Group Progress Report and Summary of Findings. http//www.eabc.org/progress.htmThe United States Department of Agriculture. 1998. Biotechnology. http//www.useu.be/AGRI/biotech.htmlThe United States Mission to the European Union. 1999. EU Committee Accepts Two Labeling Proposals For Biotech Food. http//www.useu.be________ __. 1999. USTR Official Position on Biotechnology and Trade. http//www.useu.be__________. 1998. Genetically Modified Organisms. http//www.useu.beWambugu, Florence. 1999. Why Africa needs agricultural biotech. Nature. Volume 400. http//www.nature.com