World Finance

World Finance

October 10, 2016 07:47 ET

World Finance Report Finds That "Controversial" Microfinance Benefits World's Poorest Communities

LONDON, ENGLAND--(Marketwired - Oct. 10, 2016) - When it was first introduced in the late 1970s, microfinance was celebrated as the long-awaited answer to global poverty. Its founder and biggest proponent, Bangladeshi economist Muhammad Yunis, even won a Novel Peace Prize in 2006 for his work at Grameen Bank. Years later, however, the unique banking model came under fire for exploiting the underprivileged and even driving them further into poverty. The latest issue of World Finance delves into the controversial history of microfinance and explores whether it still has a place in the developing world.

The World Finance report finds that while there are some organisations driven by the bottom line that continue to give microfinance a bad rap, there is a justification for providing banking services to so-called 'unbankables'. As opposed to merely focusing on micro loans, microfinance institutions that cover a whole suite of products, from savings to insurance, can give people the financial access they need to improve their lives. As such, individuals living in poverty can have greater employment and education opportunities, ensure that they are better placed to weather a storm, and build a brighter future for their children.

According to World Finance, technology now plays a pivotal role in bridging the gap between financial institutions and the millions of people around the globe living below the poverty line. "Now that we are able to collect data on people, because they are using mobile phones or other electronic technology, in some sense they become more visible to us - suddenly these people become 'bankable'," Bhagwan Chowdhry, Professor of Finance at UCLA told World Finance. "I am very optimistic that those developments will actually make microfinance more of a success in the coming years than it has been in the past."

Elsewhere in World Finance, we investigate the potential benefits that open borders could offer the global economy, big brand scandals, labour force participation in the US and Indonesia's dependence on its growing coal industry.

For an in-depth look at the latest stories in business and finance, read the latest issue of World Finance, available online and in print now.

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