Rapid expansion of microcredit around the world has been matched by an expanding body of theoretical literature on the subject. The main objective of these theories is to explain how microcredit institutions have successfully made credit accessible to the poor without compromising the commercial viability of lenders, a feat that seemed impossible to achieve in the light of past experience. In the present chapter and the next, we try to outline the main contours of this theoretical journey in a relatively accessible manner.1 Since these theories seek to explain how microcredit has succeeded in overcoming many of the failures and limitations of the rural credit market in developing countries, a good starting point is a brief theoretical overview of the nature of the rural credit market on which microcredit has been superimposed.