Microcredit_Presentation2_001 - Microcredit/Microfinance...

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Microcredit/Microfinance What is it? - Is the provision of small loans to individuals who have no access to traditional sources (namely to be used by micro-firm entrepreneurs to open and sustain their businesses usually in LDCs) - These loans are most often given by NGOs such as the Grameen Bank, Opportunity International, ACCION International, or by individuals looking to help people in LDCs through institutions such as Kiva and United Prosperity. WRITE FORMAL DEFINITION ON BOARD (small loans extended to very poor people for self-employment projects that generate income, allowing them to care for themselves and their families) How does it work? - NGOs or individuals lend money to specific individual firm owners in need of assistance - These small business owners and entrepreneurs use the loans to open or to expand their business and thus increase their outputs and revenues. This increased income allows borrowers to eventually repay the original loan and it also helps them to break out of the poverty cycle. Both of the cycles begin with the concept that people in LDCs have low incomes. This can then either lead to an issue of bad healthcare and education, or low investment levels. Both of these issues are solved with larger incomes helping people to escape poverty and increase their standards of living. DRAW POVERTY CYCLES ON BOARD - The system works because the loans get repaid almost 100% of the time and the small business owners help themselves improve their standards of living. Why is it needed?
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This note was uploaded on 02/12/2010 for the course ECON 201 taught by Professor Smith during the Spring '10 term at Whittier.

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Microcredit_Presentation2_001 - Microcredit/Microfinance...

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