Microfinance Essay

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Microfinance is the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services. More broadly, it is a movement whose object is "a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance, and fund transfers."[1] Those who promote microfinance generally believe that such access will help poor people out of poverty. Microfinance is a broad category of services, which includes microcredit. Microcredit is provision of credit services to poor clients. Although microcredit is one of the aspects of microfinance, conflation of the two terms is endemic in public discourse. Critics often attack microcredit while referring to it indiscriminately as either 'microcredit' or 'microfinance'. Due to the broad range of microfinance services, it is difficult to assess impact, and very few studies have tried to assess its full impact.[2] Contents [hide] * 1 Challenges * 2 Boundaries and principles * 3 Debates at the boundaries * 4 Financial needs of poor people * 5 Ways in which poor people manage their money * 6 Current scale of microfinance operations * 7 "Inclusive financial systems" * 8 Microcredit and the web * 9 Evidence for reducing poverty * 10 Microfinance and social interventions * 11 Other criticisms * 12 Bibliography * 13 See also * 14 Notes * 15 External links [edit] Challenges Traditionally, banks have not provided financial services, such as loans, to clients with little or no cash income. Banks incur substantial costs to manage a client account, regardless of how small the sums of money involved. For example,

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