ABSTRACT
Microfinance is the provision of financial services such as deposit accounts, loans, payment services, money transfers and insurance to poor and low-income households and enterprises which do not have access to the formal financial sector. The most common form of microfinance is microcredit, where small loans between $50 and $500 are made, usually for self-employment. Microinsurance is a particular area of microfinance where lots more work and policy is needed. The microfinance industry incorporates millions of clients, hundreds of thousands of employees, and involvement from development agencies, governments, banks, consultancies, NGOs and cooperatives. Microfinance is often considered synonymous with the group lending model and microcredit popularised by the original Grameen Bank model and the likes of BancoSol in Bolivia. Group-based lending is where borrowers are jointly liable for repaying the loan. The successful initial public offerings by the Banco Compartamos in Mexico in 2007 and SKS in 2010 suggest that private financing can help grow the microfinance industry.
