Area of Focus: Microcredit

Created: Jan 05, 2007
Updated: Aug 06, 2007

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Microcredit

"My experience working in the Grameen Bank has given me faith; an unshakable faith in the creativity of human beings. It leads me to believe that humans are not born to suffer the misery of hunger and poverty. They suffer now as they did in the past because we turn our heads away from this issue." -Muhammad Yunus

Definition

Microcredit is the extension of very small loans (microloans) to the unemployed, to poor entrepreneurs and to others living in poverty who are not bankable. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimum qualifications to gain access to traditional credit. Microcredit is a part of microfinance, which is the provision of financial services to the very poor; apart from loans, it includes savings, microinsurance and other financial innovations. The intention of microcredit institutions is to help poor people, and those denied access to credit, to overcome poverty and to fund income-generating activities for self-employment in order to build social capital.

Keywords

microcredit, microlending, microfinance, access to capital, collateral, credit as a human right, poverty reduction, financial sustainability, financial empowerment, economic independence, social capital, business, economics, credit societies, debt, credit union, Grameen Bank

Change In Action

The Grameen Foundation's mission is to empower the world's poorest people to lift themselves out of poverty with dignity through access to financial services and to information.

Opportunity Internationl UK exists to empower people and communities in the world's poorest countries to overcome poverty and to secure sustainable improvements in the quality of their lives.

Related WiserEarth Portals

Corporate Ethics
Finance Policies and Institutions
Fiscal Policies, Institutions and Taxation
Green Banking and Insurance
Responsible Business Practices
Business Firm and Organization Sustainability
Microfinance
Natural Capitalism
Socially Responsible Investment

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Tools for Change

The Year of Microcredit lists non-profit organizations involved in microcredit.

Small Fortunes: Microcredit and the Future of Poverty tells the stories of how short-term loans of even a few dollars have resulted in dramatic changes in lifestyles for families who otherwise would have no means of lifting themselves out of their poverty.