What’s the difference between “microfinance” lending and “subprime” lending?
Babyface asked:
Some guy wins the Nobel prize for microfinance lending in Indonesia. What he described sounded just like the villified subprime lending in the U.S. Is there a difference between the two? One sounds humanitarian, the other rapacious, but the rates & products sounded exactly the same to me.
Some guy wins the Nobel prize for microfinance lending in Indonesia. What he described sounded just like the villified subprime lending in the U.S. Is there a difference between the two? One sounds humanitarian, the other rapacious, but the rates & products sounded exactly the same to me.
Microfinance normally involves making small loans to several individuals who by the way will be liable for each others payments. Subprime lending is giving regular loans to high risk individuals(bad credit people) Now both this have high interest rates on the loans because of the risks involved. And microfinance refers to lending in the aspect of starting businesses in developing countries, the reason the rates are high on this loans is specific to each country