ABSTRACT
This chapter focuses on the new view of small and micro-business finance and presents the financial systems perspective, the commercial perspective and the institution-building perspective. It provides an orientation for donor institutions which, through their funding decisions, essentially determine the nature of the development projects in the field. The chapter describes the credit business of a target group-oriented financial institution. It also focuses on the choice of a credit technology and on the imperative of keeping costs low and achieving cost coverage which forces such institutions to adopt a special credit technology. The chapter explores the provision of deposit facilities to members of the target group and institution building using downscaling and upgrading strategies. As conventional banking technology is asset- and document-based, its applicability in the case of the target group of small and micro entrepreneurs is obviously quite limited. The advantage of the individual-based credit technology from the point of view of the borrower is lower transaction costs.
