Microfinance as a Component of Sustainable Economic Development in Asia

This paper outlines fundamental issues about the role of microfinance in sustainable economic development in Asian economies.

Microfinance is mooted as a tool for sustainable development in very poor countries. It has been successfully implemented in over 40 countries in the world. The improvement of the lives of very poor families in Bangladesh has been attributed to successful access to credit schemes of the Grameen Bank (GB). Whether microfinance is sustainable without initial and ongoing sponsorship for establishment and training costs is debatable. The paper states that:

• NGO-supported MFIs might not be sustainable in the short to medium term without ongoing donor support;
• Evidence favors access to credit for poor women as a means of increasing their standard of living;
• Complexity of GB and other such schemes needs to be reduced in order to lessen their expense;
• Linking microfinance programs with existing credit unions or rural banks can ensure their long-term viability.

Finally, the paper finds some evidence to suggest that the community benefits economically, educationally and socially from microfinance.