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Under What Circumstances Is Micro-Financing Successful?

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Background:
Granting small loans to poor people in order to help them start their own business and fight poverty became extremely popular among the modern world. Started as a project, micro-financing became world’s greatest fighting tool against the poverty, and is described as the foundation of financial support to poverty-stricken individuals or groups without any access to regular banking. The beginning of modern micro-finance is assigned to Dr. Mohammad Yunus who started it with lending loans to poor women in the village of Jobra, Bangladesh in the 1970s. Thirteen years later, he established Grameen Bank in 1983 and wins the Nobel Peace Prize in 2006. Since his first experimenting, micro-finance has continued evolving and today about 160 million people are served by micro-finance. Because of its existing limitations, the efficacy of micro-financing was questioned over the years, but it did not fail the title of the best anti-poverty method so far. Throughout its work, micro-finance is focusing on helping poverty-stricken households to meet their basic needs and improve their living standards. It also leads its users/customers into economic welfare improvement, its stability, and its growth. Micro-finance usually implicates small loans, small savings, small amounts of money, small businesses, and therefore its service differs from any other way of banking. Does micro-financing really work is the most common question people ask before exposing themselves to the main act. Regardless its limitations and failures, micro-financing has proved as being efficient and successful not only in reducing the poverty, but also in achieving various social objectives such as empowering women and thus promoting gender-equality, and developin...

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... greatly affected and have taken these small loans and turned their small businesses into flourishing businesses that can support their families. Micro-financing is in fact successful if loans are given to the right people who will use them in a correct manner. Perhaps micro-financing is most successful in smaller countries with a high rate of poverty because the people are less likely to take advantage of the money being given to them and know they must use it wisely to survive. We would find it interesting to learn more about the men in micro-financing and how they are affected by it, as well as if there are success stories of micro-financing in larger countries. Overall, through our findings, we conclude that micro-financing is a real poverty reducer, has a great impact on social objectives, and it can make a real difference in the life of those who were served.
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