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Posted on September 21, 2010 at 12:35 PM (Answer #1)
In developing nations where the poverty rate is extremely high and economic conditions sometimes unstable, microcredit is the extension of small loans to entrepreneurs to stimulate business growth and provide opportunity for individuals who would have no other means of starting a business.
For example, a loan of even $200 to a woman who wants to start a hair salon in Uzbekistan can provide a lifetime of income an stability to the woman and her family.В She then
pays back the loan in small installments, and the money can be loaned out again to another entrepreneur somewhere else.В Kiva.org is one such organization (a non-profit) that helps connect people willing to loan money with entrepreneurs who need loans.
Such programs have been so successful that more and more people in financial circles are subscribing to the practice, knwoing that eventually it develops more markets for their own mainstream financial services.
Muhammad Yunus and his Grameen Bank of Bangladesh pioneered the idea of microloans, earning him the Nobel Prize for Economics for 2006.
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