Microfinancing and Microeconomics: Influence on Individual Lives

Abstract

There is a growing concern over the need to ensure equity in the access to resources to promote economic development and well-being. However, scarcity of resources makes it difficult to produce or access products and services that satisfy individual needs. This paper identifies microfinancing and microeconomics as crucial drivers of effective resource allocation and distribution because they help individuals navigate economic challenges. In this regard, microfinancing ensures small businesses and poor entrepreneurs get credit and saving products by removing collateral restrictions. The loans match their business goals and visions. Microeconomics entails improving the production, distribution, and consumption of goods and services among the building blocks of the economy-wide phenomena – individuals or households and businesses. Through a review of various literature, this paper identifies four influences of microfinancing and microeconomics. First, they help individuals break from poverty by improving their access to basic needs. Second, microfinancing and microeconomics create the possibility of income streams by promoting financial inclusion. Third, the strategies encourage innovation by allowing individuals to establish businesses that solve their socio-economic challenges. Last, they cultivate entrepreneurship by providing simple, time-saving startup capital and other credit and saving products. The paper seeks to serve as a point exploring the role of microfinancing and microeconomics in the economic development of nations.