Microfinance as a financing strategy to alleviate poverty

Alleviating poverty is becoming increasingly important issue in the world politics where one in five of the population has been earning less than one dollar in a day. Today, microfinance comes to the forefront as a result of ineffective methods of alleviating poverty. The method of microfinance includes credit and other financial instruments to enable low-income families to live on and to set up their own business. Facilities of microfinance system have been evolved from microcredit service in 1970?s to savings, money transfers and insurance in parallel with the needs of the poor?s. Increasing range of services offered led trade banks to get into microfinance market. As from 1990?s, Non-governmental organizations have been turned to trade banks or micro finance organizations as trade banks provide microfinance services.This study aims to assess remarks on microfinance and its applications as well as examine the reasons of unsuccessful applications of the system in other developing countries. The methods of the study include reviewing unpublished literature and conducting a survey for micro finance organizations to come through interconnecting theory and application.This study consists of four main chapters, namely the Phenomenon of poverty and micro finance as a financing strategy, Applications and problems, Risk management in micro finance strategy and Research method and findings.