What is Microfinance?
Micro-finance refers to a variety of financial services that target low-income clients, particularly women. Since the clients of micro-finance institutions (MFIs) have lower incomes and often have limited access to other financial services, micro-finance products tend to be for smaller monetary amounts than traditional financial services. These services include loans, savings, insurance, and remittances. Micro-loans are given for a variety of purposes, frequently for micro-enterprise development. The diversity of products and services offered reflects the fact that the financial needs of individuals, households, and enterprises can change significantly over time, especially for those who live in poverty. Because of these varied needs, and because of the industry's focus on the poor, micro-finance institutions often use non-traditional methodologies, such as group lending or other forms of collateral not employed by the formal financial sector.
MIX recognizes many general definitions of micro-finance, but for analysis purposes, employs a functional definition:
Micro-finance services – as opposed to financial services in general – are retail financial services that are relatively small in relation to the income of a typical individual. Specifically, the average outstanding balance of micro-finance products is no greater than 250% of the average income per person (GNI per capita).
MIX recognizes many general definitions of micro-finance, but for analysis purposes, employs a functional definition:
Micro-finance services – as opposed to financial services in general – are retail financial services that are relatively small in relation to the income of a typical individual. Specifically, the average outstanding balance of micro-finance products is no greater than 250% of the average income per person (GNI per capita).
Read more: http://www.themix.org/about/microfinance#ixzz2yHvvF4d1
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