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Microfinance Concepts and Principles

Business Management10 CardsCreated about 1 month ago

This deck covers the fundamental concepts, definitions, and principles of microfinance, including its approaches, client protection principles, and the debate between welfarist and institutionist views.

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What is microfinance?

Microfinance refers to small-scale financial services, including credit and savings, provided to low-income individuals or small businesses lacking access to traditional banking services.

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Key Terms

Term
Definition
What is microfinance?
Microfinance refers to small-scale financial services, including credit and savings, provided to low-income individuals or small businesses lacking ac...
What are the two main approaches to delivering microfinance services?
The Financial Systems Approach and the Poverty Lending Approach.
What is the Financial Systems Approach in microfinance?
It focuses on providing sustainable financial services through financial intermediation, prioritizing efficiency and competition among MFIs.
What is the Poverty Lending Approach in microfinance?
It emphasizes poverty reduction and empowerment, often requiring subsidies and complementary services to achieve its goals.
What is meant by 'financial sustainability' in microfinance?
Financial sustainability refers to an MFI's ability to cover its costs with its revenues, ensuring long-term operations without relying on donor fundi...
What are the key principles of microfinance?
Key principles include providing a variety of financial services, integrating microfinance into mainstream financial systems, and ensuring financial s...

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Microfinance Concepts and Principles
TermDefinition
What is microfinance?
Microfinance refers to small-scale financial services, including credit and savings, provided to low-income individuals or small businesses lacking access to traditional banking services.
What are the two main approaches to delivering microfinance services?
The Financial Systems Approach and the Poverty Lending Approach.
What is the Financial Systems Approach in microfinance?
It focuses on providing sustainable financial services through financial intermediation, prioritizing efficiency and competition among MFIs.
What is the Poverty Lending Approach in microfinance?
It emphasizes poverty reduction and empowerment, often requiring subsidies and complementary services to achieve its goals.
What is meant by 'financial sustainability' in microfinance?
Financial sustainability refers to an MFI's ability to cover its costs with its revenues, ensuring long-term operations without relying on donor funding.
What are the key principles of microfinance?
Key principles include providing a variety of financial services, integrating microfinance into mainstream financial systems, and ensuring financial sustainability.
What is the role of interest rate ceilings in microfinance?
Interest rate ceilings can hinder the ability of MFIs to cover costs, reducing the availability of credit for the poor.
What is the significance of client protection principles in microfinance?
Client protection principles ensure that financial products are designed and delivered without causing harm, and that clients are treated fairly and respectfully.
What is the 'triple bottom line' in microfinance?
The triple bottom line refers to the economic, social, and environmental impacts of microfinance activities on clients.
What does 'outreach' mean in the context of microfinance?
Outreach refers to the scale, depth, breadth, geographical reach, and quality of financial services provided to clients.