MICROFINANCE MIDTERM EXAM

Providing small loans directly to individual borrowers, rather than groups, to support

their entrepreneurial ventures or small businesses. These loans are typically tailored to

the specific needs of each borrower and are often utilized for income-generating

activities. By offering personalized financial solutions without the requirement of

collateral or extensive credit history, individual lending promotes economic

empowerment and helps individuals build sustainable livelihoods.

(a)  

Involves providing small loans to a group of individuals who guarantee each other’s

repayment. These groups often consist of 5 to 10 members who support and monitor

each other’s businesses. Group lending fosters social cohesion, reduces risk for

lenders, and promotes financial inclusion among underserved communities.

(a)  

Microfinance institutions offer small loans, often without requiring collateral, to individuals who

may not have access to traditional banking services. These (a)   are typically used for income-

generating activities or to support small businesses.

Microfinance institutions also provide savings accounts tailored to the needs of low-income

individuals. These accounts may have lower minimum balance requirements and fewer fees

compared to traditional bank accounts, making them more accessible to those with limited

financial resources.

(a)  

Microinsurance products are designed to provide protection against risks such as illness, crop

failure, or natural disasters to low-income individuals and communities. These insurance

products are often more affordable and tailored to the specific needs of microfinance clients.

(a)  

Microfinance institutions may facilitate domestic and international money transfers for their

clients. This service enables individuals to send and receive funds securely and efficiently, often

at lower costs compared to traditional remittance services.

(a)  

Mainly established businesses and individuals with good credit history

and collateral (something valuable they can give the bank if they can't repay the loan).

(a)  

Who they serve: The poor, especially women, who often have no credit history or

collateral.

Loan size: Small loans meant to start or grow income-generating activities.

Focus: Empowerment through microfinance. Saving is emphasized alongside borrowing.

Application process: Simpler, often group-based with peer support and frequent

repayments to build trust.

(a)  

(a)   Like a high-end department store, with stricter requirements for

entry and expensive items.

(a)   Like a community market, designed to be accessible to everyone and

offering the things they need to get started.