Poverty reduction strategies generally aim at improving the asset holdings of the poor, either by endowing them with additional financial, fixed, human, natural social asset and by increasing the productive of assets they already hold or both. The provision of MF is hence regarded as one of the most important policy tool in alienating poverty (MC Summit, 1997, Mordunch, 1999). In all we are giving reference to the need of providing assistance to the poor especially the rural poor; it’s easy to imagine poor people don’t need financial services but when you think about it they are using these services already, although they might look a little different. There isn’t a specific date or time of the inception pf credit delivery (formal MF), however it has been there since time immemorial; from susu collectors, loans from family members and even money from “shylock” money lenders.
Viewed towards the relevance of the financial market in general and rural microfinance in particular, has been diverse throughout the history of the coinage itself. Be it conventional or scientific, it means that there was no time in history when development economists came into the sense of consensus as to the use, relevance, scope, design and link of MF in the financial market to development.
It has been proven that the famous classical and neoclassical models, how finance can give birth to the golden saving rate whereby growth could be kept up at pre-determined rates given the capital output ratio. Thus view has been taken for granted ever since the introduction of the simple Harold Damar model came into the literature. The focus was on how savings could be triggered to keep in pace with investment level that can bring about desired rate of growth thus strategy of supply lending finance for everywhere, where savings is lacking especially in the rural areas, where majority of the poor resides. Until recently and perhaps in some developing countries up to... [continues]
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