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A1539
Title: The effect of microfinance on countries and individuals Authors:  Joseph Tarrant - Rose-Hulman Institute of Technology (United States) [presenting]
Abstract: The concept of microfinance goes back to the 1970s, though its use has increased over the past twenty years. Many have heralded microfinance as a way for people in poverty to have the liquidity needed to start businesses or to keep from reaching a point of desperation in their personal finances. Many claim that microfinance allows the poor a way out of the generational poverty they have experienced. Yet the rates on microfinance loans are often exorbitant. Can there be proof that microfinance helps individuals? Does microfinance lead to a smaller shadow economy as individuals can move to the formal economy? Can it be seen to help national economies? We look at the effect of growing microfinance on country's GDP, on the size of the underground economy, and on Gini coefficients.