How Do You Spell MICROLENDING?

Pronunciation: [mˈa͡ɪkɹə͡ʊlˌɛndɪŋ] (IPA)

Microlending is a financial model aimed at providing small loans to people who have limited access to traditional banking services. This term is spelled /ˈmaɪkrəʊlɛndɪŋ/ in IPA phonetic transcription and is derived from the words "micro" and "lending". The word "micro" refers to something small in scale, and "lending" refers to the practice of providing someone with a sum of money that is to be repaid with interest. Microlending has become increasingly popular in recent years as a way to support entrepreneurship and economic development in underserved communities around the world.

MICROLENDING Meaning and Definition

1. Microlending refers to the practice of providing small loans, typically ranging from a few dollars to a few thousand dollars, to individuals or small businesses in developing countries who do not have access to traditional forms of credit. It is a financial service aimed at empowering low-income individuals, particularly women and entrepreneurs, to start or expand their own businesses and improve their livelihoods.

   The concept of microlending gained prominence in the 1970s and 1980s, pioneered by institutions like the Grameen Bank in Bangladesh. These loans are often used to invest in income-generating activities such as farming, handicrafts, or small-scale trading. By providing access to capital, microlending seeks to alleviate poverty, stimulate economic growth, and promote social development.

   Microlending institutions evaluate loan applicants based on their character, capacity, and collateral. Instead of relying on traditional credit scores and collateral requirements, microlenders often emphasize a borrower's personal reputation and trustworthiness within their community. This innovative approach allows individuals with limited financial resources to receive the necessary funds to start or expand their businesses.

   Microlending typically involves reduced interest rates compared to traditional commercial loans, but the rates might still be higher than interest rates in developed countries. This is due to the higher risk associated with lending to borrowers who lack collateral and credit history. However, microlenders also provide additional support through financial education and training programs to ensure the borrowers effectively utilize the loans and improve their financial capabilities in the long term.

   Overall, microlending is a powerful tool that enables individuals and small businesses in underserved communities to access affordable financial services, which, in turn, fosters economic growth and social progress.

Etymology of MICROLENDING

The word "microlending" is derived from combining two words: "micro" and "lending".

1. Micro: The term "micro" comes from the Greek word "mikros", meaning small. In English, it is used as a prefix to signify something very small, minute, or involving a small scale.

2. Lending: The word "lending" originates from the Old English word "lendan", which means "to give for temporary use on condition of return". It is related to the Proto-Germanic word "landjan" and the Middle Dutch word "lenden". The concept of lending involves providing money or resources to someone temporarily, with the expectation of repayment.

Combining these two elements, "microlending" refers to the practice of providing small loans to individuals who typically lack access to traditional banking services or collateral.