Glosarium ANP

• NETWORK – A network is a structure of clusters and nodes and connections between the nodes that appears in a single window.   A network usually has feedback (lines going both ways between clusters) and may have inner dependence (a loop on a cluster indicating nodes in that cluster are connected to each other).  A hierarchy is a simple kind of network that has a goal node in a goal cluster that connects to criteria in a criteria cluster and so on, downwards, but no feedback.
• MODEL – A decision model is a logical structure for making a decision.  Your decision model will have two files with a .mod extension.  The first is the main model that has the Benefits, Opportunities, Costs and Risks nodes, called the merits, in the top level network and a waterfall of subnetworks beneath.  The networks at the very bottom contain the decision alternatives.  This is the part of the model directly concerned the decision.  The second is the strategic criteria ratings model that is used to establish priorities for the B, O, C, and R in this particular decision.
• NODES AND CLUSTERS – A cluster is a window inside a network that contains nodes.  A cluster is a logical grouping of factors or elements in the decision being considered.  The factors or elements are the nodes.  Clusters are a device to help you in structuring the decision problem.  All connections are made between nodes.  Clusters end up linked by default when a node in one cluster is linked to some nodes in another cluster.

IN SEARCH OF SUSTAINABLE CONVENTIONAL AND ISLAMIC MICROFINANCE MODEL FOR MICRO ENTERPRISES

Ascarya and Widodo Cahyono

ABSTRACT

The role of Micro Enterprises (MEs) in Indonesia, especially after monetary crisis, considered as a safety valve in the process of national economic recovery both in enhancing economic growth and reducing unemployment rate. MEs have always been in difficulties to access loan or financing from the banking industry (conventional as well as Islamic financial institutions) for a number of reasons. This study is aimed to determine and evaluate several existing models of conventional and Islamic microfinance for MEs to find the best existing microfinance model.

The results show that the best conventional Grameen model is Koperasi Mitra Dhuafa, the best Islamic Grameen model is KUBE Sejahtera No.21, the best conventional rural bank model is BKK Purwodadi, the best Islamic rural bank model is Amanah Ummah, the best conventional micro banking unit model is BRI Unit, while the best Islamic micro banking unit model is BSM Warung Mikro. The overall best MFIs are Koperasi Mitra Dhuafa (cGrameen), BRI Unit (cMBU) and UGT (BMT). Moreover, the best financing program is held by KUBE (iGrameen), the best social-development program is held by KUBE (iGrameen), the best MFI performance is held by Amanah Ummah (Islamic Rural Bank), while the best outreach is held by BRI Unit (cMBU).

The most important sustainability criteria are: 1) Aid Independent (MFI Performance); 2) Coverage (Outreach);  3) Savings Program (Soc-Dev. Program); 4) Profitability (MFI Performance); 5) Risk Mitigation (Financing Program); 6) Social Services (Soc-Dev. Program); 7) Pick-Up Service (Financing Program); and 8) Avg. Financing (Outreach). Moreover, Cooperative-BMT model is the most balanced sustainable model, which is operated as a more social business institution.

JEL Classifications: G21, G28, O17

Keywords: Microfinance, Islamic Microfinance, Microfinance Institution, Micro Enterprises

BOOK: Multiple Criteria Decision Analysis

The Analytic Hierarchy Process (AHP) and its generalization to dependence and feedback, the Analytic Network Process (ANP), are theories of relative measurement of intangible criteria. With this approach to relative measurement, a scale of priorities is derived from pairwise comparison measurements only after the elements to be measured are known. 

The ability to do pairwise comparisons is our biological heritage and we need it to cope with a world where everything is relative and constantly changing. In traditional measurement one has a scale that one applies to measure any element that comes along that has the property the scale is for, and elements are measured one by one, not by comparing them with each other. 

In the AHP paired comparisons are made with judgments using numerical values taken from the AHP absolute fundamental scale of 1-9. A scale of relative values is derived from all these paired comparisons and it also belongs to an absolute scale that is invariant under the identity transformation like the system of real numbers. 

The AHP/ANP is useful for making multicriteria decisions involving benefits, opportunities, costs and risks. The ideas are developed in stages and illustrated with examples of real life decisions. The subject is transparent and despite some mathematics, it is easy to understand why it is done the way it is along the lines discussed here.