Microfinance institutions are the financial institutions of different types which fulfil the function of crediting small business. It is natural that small firms will never exist without the support of microfinance institutions which lend money to the novice businessmen regarding the quality of their business plans.
Obviously, small business is a very important branch of the state’s economy, because it provides smart and creative people with the chance to start their own business and produce something useful for the society. The majority of the wise and talented people did not open their potential just because of the unfavourable financial background. Microfinance institutions have the duty to provide people with credits which can be spent on starting one’s business. These institutions observe small business and its development form the point of view of two aspects – economical and social.
First of all they want to make money, so they provide only smart and perspective businessmen with credits; otherwise, they simply lose money, as the unsuccessful small business is under the big risk of failure. On the other hand, microfinance institutions observe the problem from the point of view of social issues. For example, due to the development of small business many people find job and the problems of unemployment and poverty will gradually reduce. Due to the growth of small business the average financial background of the country will increase. Of course, the institutions can vary according to their size, capacities and manner of financing. There are big companies which can provide hundreds of people with credits, but there are ones which can support millions of novice businessmen. Finally, there are private and state microfinance institutions, which differ according to the type of capital and ownership.
Microfinance institutions are the institutions which provide novice businessmen with credits for the development of their business and it is useful to learn something new about the organization of these institutions. The student who is interested in the issues connected with the structure and development of microfinance institutions has the chance to develop the though deeper and complete a profound and informative project about them. The proposal should be interesting, relevant and touch upon the methods and expectations on the research in order to make the project look logical and well-structured.
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