Question

Microfinance aims to reduce poverty and promote development.

(1) Briefly discuss and give your interpretation of the basic theoretical ideas behind microfinance and how it works;

(2) its main advantages and disadvantages, and the evidence on its performance;

(3) discuss whether, according to you, there is a need to reform how microfinance is implemented.

Answer 1

1-Microfinance is a banking service that is provided to unemployed and low-income ... How Microfinance Works ... Lessons cover understanding interest rates, the concept of cash flow It is a way to provide small business owners and entrepreneurs access to capital. ... Essentially, microfinance is providing loans, credit, access to savings accounts—even insurance policies and money transfers––to the small business owner and entrepreneur.

2-advantages- It allows people to better provide for their families. Microfinance allows for an added level of resiliency in the developing world. Even when households are able to work their way out of poverty, it often takes just one adverse event to send them right back into it.

Disadvantages-Cost of outreach - reaching the unbanked populations of the world means servicing small loan amounts and servicing remote and sparsely populated areas of the planet, which can be dangerously unprofitable without high rates of process automation and mobile delivery

3-Yes there is a need to reform how microfinance is implemented because due to certain reason microfinance have some advantages as well as disadvantages so we need to reform it with a proper discussion