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Microfinance - how government regulations affect microfinance in Brazil
Finance & Accounting
Pages 8 (2008 words)
Microfinance - How government regulations affect microfinance in Brazil Contents Contents 2 Literature Review 3 References 9 Literature Review Microfinance is a form of credit in which short term loans, especially working capital loans are provided to the entrepreneurs who have a micro or small scale business.
The governments of the nations have a crucial role to play from the regulatory and financing points of view. A lot of measures are required to make this form of financing a sustainable one. This requires the scope of the microfinance schemes to be further widened. There are several challenges that the governments of the countries opting for these kinds of schemes face. There is lack of mobility in the credit and a lot of reliance on the government as the source of the funds. The competitive environment of the microfinance sector is a lot biased towards the public sector organisations. Therefore the government needs to ensure all forms of transparency in the way the markets and the competitive forces work. Several works have been conducted over the years on various aspects of microfinance. A review of the literature would provide an insight into the microfinance sector and the regulatory framework within which the Brazilian microfinance companies work. Microfinance companies are considered to be feasible alternatives for banks as well as informal sources of credit. Collaterals are used to ensure the timely repayment of the funds. The specific feature of microfinance is that instead of an individual liability toward the lending institution, there is a cooperative liability towards the lender. ...
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