Microfinance Dissertation Example | Topics and Well Written Essays - 4000 words

Microfinance - Dissertation ExampleThe foremost significance of microfinance institutions lies in their pro-poor feature Most of the developing nations are characterised by a majority of the population dwelling in poverty-stricken rural areas. Hence, microfinance institutions help to bail them let out of dire situations arising out of low investment potentials and opportunities reverberate through a poor economic growth rate. Secondly, the fragile financial systems of developing economies are too poor to confront the risk of lending out to the rural poor rather, they tend to advance their services to the more organised or formalised orbit. Hence, investment lending is indeed negligible for the rural areas in developing economies. Lastly, the rural poor in developing economies often are discouraged to avail lending options in commercial banks, where they need to deposit validatory sequence taking credit unlike in microfinance institutions, where they are allowed to accept loans c ollectively that does not expose any single individual to huge financial obligation stakes. In addition to alleviating poverty, reducing inequality of income and generating employment, microfinance institutions also help to boost up economic growths through increased production and reduced dependence on externally produced items (Woller & Parsons, 2008). The situation in Saudi Arabia Saudi Arabia could be distinguished exclusively as an oil-producing giant that draws almost all of its income from exporting the fuel round the world. However, the rise in economic growth rates has been recorded as 1.25 percent between 1981 and 2000 in contrast to a fall of 2.5 percent in GDP per capita, implying a rising inequality in the distribution of income (Raphaeli, 2003, p. 1). The nation is also characterised by an extremely skewed tax structures favourable mostly for the richer section, while the same cannot be said for the poorer population who derive their incomes out of primary activities such as farming or fishery. The modestly developed financial sector of Saudi Arabia cannot is quite unfavourable for the rural poor who have to strive hard for loans. Furthermore, the national government exhibits little effort in development of radix in these regions (Islamic Development Bank, 2010, p. 3). These loans could prove to be foundations for setting up of small scale industries conducive for the economic growth and employment generation in the nation. In addition, microfinance institutions could also bail