Essay on importance of microfinance and microcredit

types of microfinance

Poverty alleviation and economic development are the primary goals of microcredit programs, that is why they began in the developing countries of Asia and Latin America, economist Muhammad Yunus and his Grameen Bank in Bangladesh are credited of pioneering this financial innovation Smith, Thurman, Harper, a.

These intermediaries operated in an unregulated or poorly monitored markets; they charge whatever they can get away with.

For now, charitable and commercialized MFIs co-exist. Also, through micro enterprises and access to 27 Karim Lamia,De stif i g i ro- reditCultural D a i s 28 Harvey David,Brief histor of eo li eralisO ford Page 13 of 21 Keerti Rajagopalan Extended Project Qualification Essay private financing, economic institutions are seen to be moving under private sectors, which is a neo-liberal view.

Celebrity supporters include Bono, the Clintons and the Queen of Spain.

importance of microfinance pdf

Many repay 29 Overseas Development Institute, www. In contrast, nonprofit institutions take a more philanthropic bent with any profits, using them to expand the number of people it helps or create more programs.

Furthermore, microfinance industry in India has witnessed a fast-paced growth in last two decades. Teach a man to fish, and you feed him for life.

This prompted the formation of self help groups for equally disadvantaged groups in order to pool resources for the mutual benefit of the group members.

Microfinance examples

Can microenterprise develop into a formal sector enterprise? This is the region where microfinance services are attractive. Bateman is a renowned critic of microfinance and therefore this source was highly critical. The most profitable microfinance institution in was in Africa, with an average of In many instances, people looking to join microfinance organizations are first required to take a basic money management class. This is not seen as the case except for a few agencies supported by large donor organisation or government agencies. For example, the microfinancing institution Opportunity International reported repayment rates of approximately Secondly, the analysis and empirical evidence of macro-economic development in the major developing countries suggest that such developments are mainly due to state co-ordinated policy interventions, national socio-economic programs with the involvement of institutional financing and not because of microfinance initiatives. On the other side of the spectrum, there were more than 1, billionaires in the world in Singer
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