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Micro finance

Author

Listed:
  • Ramachandran, Ramakrishnan
  • Senthil Kumar, T. S.

Abstract

Poor people often have just hand to mouth existence and have few reserves for major expenses such as illness, weddings, house repairs or education. They are unable to build their savings and are forced to borrow at exorbitant rates. This further adds to their burden and worsens their economic situation. Micro finance is the supply of loans, savings, and other basic financial services to the poor. The idea of micro finance was developed as a survival strategy for the poor. In India, Ela Bhatt established the Self-Employed Women's Association (SEWA) in 1974. Mohammed Yunus founded the Grameen Bank project in Bangladesh in 1976. Micro credit provides poor people with access to small loans at more manageable interest rates, and can lead to self-sufficiency and poverty alleviation. There are many models of micro credit. Saving and borrowing are really different ways of turning small amounts of money into lump sums. Saving involves building a lump sum by first accumulating smaller amounts. Borrower is taking the lump sum first and then 'saving' afterwards in the form of loan repayments Poor people have been able to reduce debt burdens and break the cycle of poverty, when the interest in low. Studies of the impact of micro finance in more than 24 countries have found dramatic improvements in household income levels. This paper looks at the various aspects of Micro finance.

Suggested Citation

  • Ramachandran, Ramakrishnan & Senthil Kumar, T. S., 2006. "Micro finance," MPRA Paper 54548, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:54548
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    File URL: https://mpra.ub.uni-muenchen.de/54548/8/MPRA_paper_54548.pdf
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    Cited by:

    1. Kharisya Ayu Effendi & Rozmita Dewi Yuniarti, 2018. "Credit Risk And Macroeconomics Of Islamic Banking In Indonesia," Journal of Smart Economic Growth, , vol. 3(1), pages 45-56, Juin.
    2. Swati Chauhan, 2021. "Social and Financial Efficiency: A Study of Indian Microfinance Institutions," IIM Kozhikode Society & Management Review, , vol. 10(1), pages 31-43, January.
    3. Jaya Mathew & Reeba Kurian, 2016. "Engendering Women’s Access to Credit through Financial Inclusion in India," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(6), pages 201-201, June.
    4. Lim, Terence & Lo, Andrew W. & Merton, Robert C. & Scholes, Myron S., 2006. "The Derivatives Sourcebook," Foundations and Trends(R) in Finance, now publishers, vol. 1(5–6), pages 365-572, April.
    5. Sudarso Kaderi Wiryono & Kharisya Ayu Effendi, 2018. "Islamic Bank Credit Risk: Macroeconomic and Bank Specific Factors," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 53-62.
    6. Renu Arora & Archana Singh, 2014. "Problems and obstacles in credit risk management in indian public sector banks," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 14(1), pages 353-362.
    7. Nitin Kumar & Arvind Shrivastava & D. P. Singh & Purnendu Kumar, 2018. "Determinants of Financial Stress of Indian Banks," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 19(2), pages 210-228, September.

    More about this item

    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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