Question

Explain the importance of microfinancing in 300 words in your own words.

Answer 1

Micro financing is important because micro financing means that they are trying to get to the smallest section of the business and the people so they will be trying to help in increasing the gross domestic product of the country to a large level because when there would be a large number of people who are provided with the financing services and the credit services, it will mean that they will be having access to the credit market and the financing world so they can be using their credit ability in order to maximize their overall profits in the business and they can also use this credit in order to maximize their own interest, so it can be said that microfinancing will be an important factor in order to provide credit to all these people who are very small business persons and mostly retail individuals so micro financing will be helping them in order to gain access to the credit market.

Micro financing is highly representative of increase in the liquidity into the economy and they are used for infusing the high level of credit access to smallest section of the society, so it can we say that micro financial organisations are equipped with a better mechanism for providing loan to lower income people who can maximize upon the credit facility and expand their business in the long run so micro financing is an additional branch of Financing which will be working in addition to the commercial bank and other large financial institution would be helping the small consumers in order to gain access to the financial market and improve their probability of success through their business.

Microfinance is an emerging concept in many of the economies where there has been increasing credit growth through better regulatory management and flexibility in in access to the financial so those people who are having a low credit repayment ability in the retail sector also to be provided with loans in order to have an increase in the economic growth because when these people are having access to the credit it will mean that these people will be trying to increase their overall probability of having success through use of debt capital in their overall capital structure to a large extent and hence micro financing industries are very important in order to have a sustainable economy and widespread economy which provide access to a large number of businessman