Market Solutions in Poverty: The Role of Microcredit in Development Countries with Financial Restrictions

Mário Olivares and Sofia Santos

No 2009/12, Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa

Abstract: The creation of credit markets in poor countries is a crucial factor for their development. If well put into practice, people would be able to improve their quality of life. With the suitable support they will become educated and that will allow them to enlarge their business, to think by themselves and to appreciate that they have rights. Microfinance has seen great changes in the last 50 years and has become visibly known due to the success of some occurrence in developing countries and more recently in Europe through a number of schemes that have been implemented solving this key issue. In this article we discuss this experience, we evaluate the economic theory of microfinance and propose a alternative model. We conclude that microcredit can be see as a new approach in developing policies or as a scheme against unemployment.

Keywords: microfinance; microcredit; rate of interest; development; poverty; money. (search for similar items in EconPapers)
JEL-codes: D7 D8 G19 O23 (search for similar items in EconPapers)
Date: 2009-03
New Economics Papers: this item is included in nep-mfd
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More papers in Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa Department of Economics, ISEG - Lisbon School of Economics and Management, Universidade de Lisboa, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL.
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