Raymundo Garza Garza

Matricula 731561
Essential Financial Englsih
1. How does microfinance help the poor?

Because it encourages entrepreneurship increasing the income and generating activity

which reduce poverty. Microfinances empowers poor people increasing their access to
education, and health. This build social capital among poor and vulnerable communities
It helps to finance poor people.

2. Who are microfinance clients?

The typical microfinance clients are low-income persons that don’t have access to formal
financial institutes. Most of them being self-employees, entrepreneurs, and micro-
enterprises
3. What kind of institutions deliver microfinance?

Most of the microfinance institutions start like non-for-profit organizations like non-
governmental organizations, credit unions, financial cooperatives and state-owned
development and postal saving banks.
Now Microfinance institutions are organized as for-profit entities like commercial banks
specialized in microfinance or microfinance departments of a full-service bank

4. What is microfinance?

Is a type of banking service provided to unemployed or low-income individuals or groups

who otherwise would have no other access to financial services.

5. When is microfinance NOT an appropriate tool?

When there is an often irregular and undependable income that produces a lack of
willingness and ability to schedule loan payments which instead of helping a poor person
will throw him into a debt.

6. What is microcredit?

Microcredit is a common form of  microfinance  that involves an extremely small  loan  given
to an individual to help them become self-employed or grow a small business. These
borrowers tend to be low-income individuals, especially from less developed countries

7. Why do MFIs (microfinance institutions) charge high interest rates to poor people?

Because the cost is higher, the administrative cost of making tiny loans y much higher in
percentage terms than the cost of making a higher loan.
Besides loan size other factors can make MFI to charge highest interest rates, one of it is
that MFIs may operate in areas that are more remote or have a low population density,
making lending more expensive.