What are the key differences between microfinance and traditional banking?

What are the key differences between microfinance and traditional banking?

Microfinance focuses on providing financial services to low-income individuals or small businesses, while traditional banking serves a broader customer base, often requiring higher income and credit scores.

Can you explain how microfinance helps the poor?

Microfinance helps the poor by offering small loans, savings accounts, and insurance, enabling them to start businesses, save money, and manage risks.

What are the advantages of traditional banking?

Traditional banking offers a wider range of financial products, better interest rates on savings, and more robust customer service compared to microfinance.

Are there any risks associated with microfinance?

Yes, risks include high-interest rates, over-indebtedness, and the potential for exploitation by lenders.

Which option is better for small entrepreneurs?

It depends on the entrepreneur's needs; microfinance is often more accessible, while traditional banks may offer better terms for those with established credit.