Micro Lending For many years microloans have helped people out of poverty throughout the world. Unlike handouts, microloans must be paid back. These loans are very often paid back.
There are pros and cons to the economy by having to pay the money back. Also, there are impacts on the environment. Microloans are very small loans given to borrowers. Typically, these loans are given to the poor with the intention for them to find work and support themselves. Not only were microloans designed to reduce poverty, additionally it has given power to women.Microloans were developed to be set apart from original loans. Microcredit offers small loans with high interest rates that are needed to return the money.
Microlending Essay Example
Communities are benefitted as well from micro lending. Instead off collecting taxes from everyone and giving a handout to the poor, these loans are required to be paid back and the tax money can be spared for other important issues. Benefits from microloans help the poor, women, starting business, and education and health. Without the access to the financial services such as loans, savings accounts, fun transfers, and insurance, the obstacles to overcoming poverty can be nearly impossible.Most countries offer a microloan of 100$. This is all it takes to start a business and support a family. The key reason of how microloans are successful, is the requirement to repay the loan, and the size of the loan.
The repayment rate of these microloans is above 97%. Handouts are often taken advantage of; spent on wants, instead of necessities. With knowing that the loan must be paid back, people spend the money on important things that will help them later on. If microloans are specifically given to the poor and meet cultural, economic, and legal environments, the poor can repay the loans.Some banks are specifically giving these types of loans to women. The benefit of targeting women for these loans promotes equal rights. Most of these women run the house, and need money to raise children, especially when in poverty.
Negative effects from microloans are significant. Some say microcredit has put the poor into a mountain of debt. For example, if the person in debt uses the microloan to spend on education, but runs out of money and doesn’t have a job. That person is essentially out of luck with a lot of debt. Others argue that the men take microloans from the women, and the women are left with a pile of debt.Microloans may not be the solution to every situation that creates poverty, and cannot be the solution when land is being taken from the poor, and leaving them in poverty. Microcredit can also create problems by forcing people to work to get the money back.
Farmer suicides in India have increased because of trying to get enough money to pay back microcredit. By borrowing this money over and over, people may grow dependent on borrowing money and may lead to a debt trap. Access and biodiversity are rights to the person. Rights cannot be replaced by credit.Having the right to water is different than using microcredit to buy water. After all of these rights have been taken care of, then credit can come after those rights are given to the people. There are systems beyond capital; those are maintaining the ecological parts of the planet.
Countering the logic of capitalism will counter the atmosphere that is being degraded and climate change. Microloans can do a variety of good and bad things. The benefits include reducing poverty, improving communities/countries, starting a business, and empowering women.Negative effects include leaving people with a debt trap, husbands taking the credit from women, forcing people to work until they die (suicides), mistaking credit for rights, and dependence on borrowing. Finally, negative economic effects of micro lending are making people focus on they’re own debt, instead of degrading the planets environment. References: * Adams, Dale, Doug Graham and J. D.
Von Pischke (eds. ). Undermining Rural Development with Cheap Credit. Westview Press, Boulder, Colorado, 1984. * Drake, Deborah, and Elizabeth Rhyne (eds. ). The Commercialization of Microfinance: Balancing Business and Development.