Microfinance

Microfinance is a form of social investment, typically lending money to young entrepreneurs from poor backgrounds in underdeveloped countries who would not get backing through normal financial channels. The money is used to get a business going and buying the essential tools for a trade. Members of small groups often guarantee loans for each other, which reduces the default rate on loans. The 2006 Nobel Peace prize was awarded to Muhammad Yunus who set up Grameen Bank in Bangladesh to provide micro finance to young entrepreneurs in this situation.

The return to private investors in microfinance is aimed to be similar to the return from a bank deposit, plus of course the warm-all-over feeling of doing your bit for society in underdeveloped countries. The MIX Market is the focal point for information on microfinance and on public and private funds that invest in microfinance.     

See www.mixmarket.org