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Essay / Research Paper Abstract
This 10 page report discusses the concept of micro-financing and micro-credit and the impact it has on the developing nations of the world. The primary mission of most micro-lending programs is to offer production credit to the land-less, rural poor. Many of the programs rely on cooperative credit exchange and often rely on those cooperative partnerships to serve as a form of peer monitoring as a substitute for collateral. Micro-credit programs extend small loans to poor people for self-employment projects that generate income, allowing them to care for themselves and their families. In most cases, micro-credit programs offer a combination of services and resources to their clients in addition to credit for self-employment. Bibliography lists 6 sources.
Page Count:
10 pages (~225 words per page)
File: D0_Bwmicro2.rtf
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Unformatted sample text from the term paper:
and are able to make significant changes that lead to a better quality of life in many rural economies in developing nations around the world. They serve as
examples of the true meaning of international aid as well as programs designed for human empowerment. In some countries, such as Bangladesh, these programs are virtually the only major small-scale
credit programs that provide production credit and other services to the poor. Although the processes of delivery and the provision of inputs vary
from program to program, virtually governmental and non-governmental organizations in many low-income countries have introduced credit programs such as these targeted to the poor. The primary mission of most
of the programs is to offer production credit to the land-less, rural poor (usually defined as those who own less than half an acre of land). Many of the
programs rely on cooperative credit exchange and often rely on those cooperative partnerships to serve as a form of peer monitoring as a substitute for collateral. Such "group lending" or
cooperative lending programs generally have an informational advantage over outside lenders since gathering information about the actions of each member of a group would be costly and subject to misrepresentation.
Group members can monitor each other with relative ease as well as train and assist low-productivity members. Social custom in many of the nations implementing such programs allows for the
inter-relatedness that results in a form of both support and "regulation." Numerous economic and development studies have proven that very poor people are a good credit risk, especially in the
context of mutual responsibility systems. Ironically, the success of such programs in developing nations has led to the industrialized nations taking a closer
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