PROs and CONs of Microfinance: An Overview

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Microfinance > Best Practices > PROs and CONs of Microfinance: An Overview

PROs and CONs of Microfinance: An Overview
Elwin Poortman, Analyst, Netherlands, Premium Member
Microcredit has been seen as the magic bullet that can help the poor to escape poverty, however in recent years the flaws of microcredit schemes have become more clear and have shown that not everything about lending to poor is beneficial. The authors of Poor Economics elaborated on these pros & cons, and the major ones are explained below. Benefits of Microfinance:
  1. Opportunity to invest and gain access to markets & industries that were inaccessible before, due to a financial threshold.
  2. Empowerment, especially for females, since they are less financially and therefore socially dependent.
  3. often takes place in groups so that each individual is responsible for the entire groupís investing behavior, which is called joint liability. This increases social capital such as sharing knowhow, partnerships and trust building.
  4. Changing financial markets: The moneylenders that were accessible prior to the rise of Microfinance, were known to have o (...) Read more? Sign up for free
 

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Another Disadvantage of Microfinance
Karl West, Accountant, United States, Member
(...)
 

 
Good Support is Needed for Microfinance
jorge anibal hoyos hoyos, Manager, Colombia, Member
(...)
 

 
Support of a Regional Development Scheme
Niko, Consultant, Slovenia, Member
(...)
 

         
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