Question

1. Discuss how micro finance institutions contribute to the supply of money in an economic system.
2. What are the benefits presented by micro-finance institutions which are not found in commercial banks?

Answer 1

Answer:

Microfinance services are provided to unemployed or low-income individuals because most of those trapped in poverty, or who have limited financial resources, do not have enough income to do business with traditional financial institutions.

Various types of institutions offer microfinance: credit unions, commercial banks, NGOs (Non-governmental Organizations), cooperatives, and sectors of government banks. The emergence of “for-profit” MFIs is growing.