Microfinance
Financial services — savings, credit, insurance, and payments — delivered in very small amounts to people traditionally excluded from formal banking.
Definition
Microfinance covers any banking-style service designed around micro-scale transactions. It emerged formally in the 1970s with the Grameen Bank in Bangladesh, but the underlying practices — pooled community savings, small rotating loans, informal credit — are centuries old. Modern microfinance blends these traditions with digital delivery.
Examples
• ROSCAs (Susu, Tanda, Chit funds) • Grameen Bank group lending • Mobile money savings groups (M-Pesa) • Digital daily-contribution pools (like the Squirrelll.ing Daily Pool)
Also Known As
Microcredit · Micro-savings · Inclusive finance
Key Takeaways
- Micro-scale is a design choice, not a limitation.
- Community accountability substitutes for collateral.
- Digital delivery lets historical models scale globally.
Frequently Asked Questions
No. Microfinance is financial service delivery — participants save and often repay. Charity is a one-way transfer.
References
- Yunus, M. — Banker to the Poor
- Ardener, S. — The Comparative Study of Rotating Credit Associations
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