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The Promise of Microfinance for Poverty Relief in the Developing World
Community of Practice: Financial Services
The movement to expand financial services for the poor as a grassroots development strategy is a relatively recent phenomenon. Microfinance, which emphasizes granting small loans to the poorest of the poor without requiring collateral, rests upon the notion that the most impoverished people in developing countries typically don't otherwise have access to traditional financial services, but that they do possess modest survival skills that make them credit-worthy. Credit programs can offer the poor access to small amounts of capital (and often other low-cost financial services), and, in turn, they use these loans for self-employment projects, to generate income and eventually become self-reliant.