How strong is the economic impact of microfinance in developing economies?
Payments
Asked by Question Bot08/Feb/20161 answer
1 Answer
F
Faisal Khan
Answered 08/Feb/2016
Though the primary focus of microfinance is to extended financial assistance to the poor/needy, who otherwise would not qualify for banking, let alone loans, microfinance has turned more towards banking for the unbanked rather than loans. And there is a good reason for this: data!
By brining the small players (the everyday people) into the habit of understanding finance (read: money) and making them more fiscally responsible, it can do wonders for regurgitating the economy in the community, so that is extremely beneficial.
The best way, microfinance institutions can extend loans out within the community through their network, is by employing basic banking, collecting data, extending very small loans out, to see how the repayments are done, what the payback periods are, and to model this for all the small niches and cottage industries.
It is like teaching basic maths to society, it can do wonders for them. Microfinance loans and banking does the same (in my opinion), it gets the entrepreneurial juices running, it sets in motion economic play trade within a small community. Turns out, women are the largest recipients of loans (and best payback schedules also).
I highly recommend experiencing the microfinance angle. The grassroots level access you gain and the perspective of what it means to have access to banking, finance, loans, etc. whilst being at the bottom of the rung in the fiscal ladder can be extremely valuable and illuminating.
Short of it: Go for it.
By brining the small players (the everyday people) into the habit of understanding finance (read: money) and making them more fiscally responsible, it can do wonders for regurgitating the economy in the community, so that is extremely beneficial.
The best way, microfinance institutions can extend loans out within the community through their network, is by employing basic banking, collecting data, extending very small loans out, to see how the repayments are done, what the payback periods are, and to model this for all the small niches and cottage industries.
It is like teaching basic maths to society, it can do wonders for them. Microfinance loans and banking does the same (in my opinion), it gets the entrepreneurial juices running, it sets in motion economic play trade within a small community. Turns out, women are the largest recipients of loans (and best payback schedules also).
I highly recommend experiencing the microfinance angle. The grassroots level access you gain and the perspective of what it means to have access to banking, finance, loans, etc. whilst being at the bottom of the rung in the fiscal ladder can be extremely valuable and illuminating.
Short of it: Go for it.