Knowra Microfinance Microfinance Microfinance provides small-scale financial services, including credit, savings, insurance, and payments, to people and businesses underserved by conventional banks.
Microcredit : Small loans, often without conventional collateral, are extended to low-income borrowers or microenterprises. It is microfinance’s best-known service, but not its only one.
Credit union : A member-owned financial cooperative that accepts deposits and makes loans to its members. Credit unions are an earlier institutional model for serving people outside commercial banking.
Microenterprise : A very small business, often operated by an individual or household with few employees. Microfinance loans commonly support its working capital and basic equipment.
Randomized evaluation of microcredit : A research approach using randomized assignment to estimate the effects of access to microcredit. These studies found varied effects rather than a uniform transformation of borrowers’ lives.
Commercial banking : The business of providing financial services, especially deposits and loans, for profit to individuals and organizations. Conventional banks often require documentation, collateral, or account sizes beyond microfinance clients’ reach.
Group lending : A lending arrangement in which members borrow individually or collectively and share repayment responsibility. Peer accountability can substitute for collateral in some microfinance programs.
Raiffeisen banking : A cooperative rural banking tradition developed in nineteenth-century Germany to provide local credit and savings. Its mutual-help principles anticipated later community-based finance models.
Mobile money : A digital service that lets users store, send, or receive money through mobile devices. Phone-based payments can lower delivery costs for financial services to remote customers.
Over-indebtedness : A condition in which debt obligations exceed a borrower’s capacity to repay without serious hardship. Aggressive lending and multiple loans can turn access to credit into financial distress.
Payday loan : A short-term, high-cost loan typically due when the borrower receives the next paycheck. Both serve people excluded from mainstream credit, but their terms and institutional purposes differ.
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