Financial Services for Small and Micro Enterprises: A Need for Policy Changes and Innovation

Abstract

The current interest in developing small and micro enterprise financing projects is reminiscent of earlier attempts to finance special small farmer credit projects. This paper reviews the generally negative experience of those efforts and identifies areas of policy change and innovation that emerges from that review which can guide the design of micro enterprise projects. The experience of the Grameen Bank in Bangladesh is also reviewed as one of the most interesting innovations in providing small loans to the rural poor.