Individuals without many resources still need the kinds of financial services that those with plenty of resources have. Following the philosophy that insurance and loans should be available to all, microfinance is a concept that allows those with less to have more.
Microfinance is a banking system that assists individuals who are unemployed or have low income by providing various services to become self-sufficient.
According to Forbes Investopedia, microcredit operations have been around since the mid-1700s. Microfinance institutions are usually located in developing countries.
Microfinance institutions aid individuals with borrowing money, saving and budgeting money, as well as insurance.
The Nobel Peace Prize winners from 2006, Muhammad Yunus and Grameen Bank, demonstrated that low-income individuals can bring themselves out of poverty if they have access to very small loans, or microloans. Furthermore, low-income individuals have very high repayment rates when loans are property constructed.
Investors can get in on microfinance. Morgan Stanley issued a microfinanced bond, which was rated an "AA" rating by Standard & Poor's. An "AA" indicates a very high quality credit.
- Examples of Microfinance Services
- Board of Governors of the Federal Reserve System. "Microfinance in the United States." Accessed June 10, 2020.
- Springer. "Competition and Microcredit Interest Rates: International Evidence." Accessed June 10, 2020.
- Kiva. "About Us." Accessed June 10, 2020.
- Federal Reserve Bank of St. Louis. "Microsavings: Opening the Door for Individuals to Invest in Themselves." Accessed June 10, 2020.
- National Association of Insurance Commissioners. "Microinsurance." Accessed June 10, 2020.
- Accion. "More Than Microfinance: Financial Literacy in India." Accessed June 10, 2020.
- United Nations African Renewal. "Microfinance: What Role in Africa's Development?" Accessed June 10, 2020.
- Small Business Administration. "SBA Accomplishments Under Obama," Pages 1 & 11. Accessed June 10, 2020.
- Morgan Stanley. "Perspectives in Philanthropy," Page 18. Accessed June 10, 2020.
- BNP Paribas. "Microfinance Barometer 2017: Global Trends of the Sector." Accessed June 10, 2020.
- The London School of Economics and Political Science. "Jason Hickel – The Microfinance Delusion: Who Really Wins?" Accessed June 10, 2020.