The Role of Microfinance Schemes in Developing and Emerging Economies

The video explores the role of microfinance schemes in developing economies, highlighting their importance in providing financial access to individuals and supporting economic growth. It discusses the challenges faced by these economies, such as poor infrastructure and reliance on unofficial markets. The video emphasizes the empowerment of women through microfinance and its positive societal impacts. The Grameen Bank case study illustrates the success of microfinance in Bangladesh, showcasing how adapted credit conditions can lead to high loan repayment rates and economic development.

What is the primary role of microfinance schemes in developing economies?

• To regulate unofficial financial markets

• To provide large-scale infrastructure funding

• To increase government tax revenue

• To offer small loans to individuals and small businesses

Why do individuals in developing economies often rely on unofficial financial markets?

• Because they offer lower interest rates

• Due to lack of access to official credit markets

• Because they are more trustworthy

• Due to government incentives

How do microfinance schemes help individuals in developing economies?

• By providing free financial education

• By offering small loans with sustainable repayment terms

• By providing large business loans

• By eliminating the need for any loans

What is one significant impact of microfinance schemes on women in developing economies?

• They increase dependency on male family members

• They provide opportunities for women to start businesses

• They reduce women's participation in the workforce

• They limit women's access to education

How do microfinance schemes benefit governments in developing economies?

• By decreasing the population growth rate

• By eliminating the need for public infrastructure projects

• By reducing the need for foreign aid

• By increasing tax revenues through higher economic activity

What was a key feature of the Grameen Bank's microfinance model?

• Loans required significant collateral

• Loans had high interest rates

• Loans did not require collateral

• Loans were only available to large businesses

What was the repayment rate achieved by the Grameen Bank's microfinance scheme?

• 99.7%

• 95%

• 90%

• 85%

What problem did Mohammed Yunus aim to address with the Grameen Bank?

• Lack of access to technology

• Lack of access to healthcare

• Lack of access to credit markets

• Lack of access to education

How did the Grameen Bank minimize the risk of loan defaults?

• By offering loans only to government employees

• By pooling funds and lending to groups

• By charging high interest rates

• By requiring high collateral

What economic model can be used to explain the success of microfinance schemes like the Grameen Bank?

• Keynesian Model

• Harrod-Domar Model

• Solow Growth Model

• Ricardian Model