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What Is Microfinance? Microfinance is an effective means to poverty alleviation. Research showed that in Bangladesh microfinance helps poor, loan-borrowing persons pull themselves above the poverty line at a rate of 48%. Those who didn’t borrow escaped poverty at a rate of only 4%. The industry’s primary agent is the microcredit loan, a small but usefully-sized loan given to a group of poor entrepreneurs. With access to credit, these poor persons can purchase productive business capital and with it start family-run businesses, thereby generating greater incomes. Microfinance Institutions (MFIs) most usually target women. Many MFIs serve multiple social missions, including gender equality, health education, access to healthcare and sustainable development. In recent years, the profitability of these institutions has become a top priority, as not-for-profit MFIs often must lend at higher interest rates. |
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