Microcredit: meaning, definitions and examples
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microcredit
[ ˈmaɪ.kroʊˌkrɛd.ɪt ]
finance
Microcredit refers to the provision of small loans to individuals or groups who do not have access to traditional banking services. It is typically aimed at empowering low-income entrepreneurs and encouraging self-employment as a means to alleviate poverty.
Synonyms
microfinance, mini-credit, small loan
Examples of usage
- He applied for microcredit to start his small business.
- Microcredit programs have helped many women become financially independent.
- NGOs often provide microcredit as a tool for community development.
Etymology
The term 'microcredit' emerged in the 1970s, largely attributed to the work of Bangladeshi social entrepreneur Muhammad Yunus, who founded the Grameen Bank. Yunus aimed to provide small loans to impoverished people without requiring collateral, which was a significant barrier in traditional banking. The concept quickly gained traction as a means to empower individuals, especially women, and stimulate local economies by providing entrepreneurs with the necessary funds to grow their businesses. By the 1990s, microcredit had evolved into a global movement, influencing development policies and poverty alleviation strategies worldwide. The success of microcredit programs has established them as a viable alternative to conventional banking, leading to the proliferation of various microfinance institutions across the globe.