What is a financial institution of development?
Development Institutions are a catch that describes several alternative financial systems that are common in developing countries. The three most common forms of financing institution are institutions of microfinance, financial institutions of communities development and revolving credit funds. Each of these systems focuses on small changes in the economic structure of the development area to improve infrastructure or business sectors in this area. The overall goal of these systems is to accelerate the development of the economy of the area to comply with standard financial systems. These institutions can be anything from private corporation to a bank or government. In any case, the investment made in the development area is usually very small in the scope of the investor, but very important for people in the affected area.
microfinance institution provides small low -interest loans and a long repayment period. These loans, which are often less than one -day work in a developed country, are used to ZHEntrepreneurship and improvement of local services in the development area. How the recipient of the loan improves its livelihood, increased purchase and sales improves the economy. In addition to loans, these institutions will usually provide ordinary banking services such as savings accounts and wire transfers.
Financial institution for community development is the next step from the institution of microfinance. These groups relate to a specific area, often neighborhood or small communities. The institution focuses on the individual area to integrate everything else. It provides banking services, loans and risk capital to local people, but not to anyone outside the area of inpturation. This keeps the money invested by the locals in the local system and strengthens the economy.
The third type of financial institution of development is not so much an institution as a process. The Revolving Credit Fund is a specific type of monetary investment. The creditor invests in an area of a certain amountmoney and begins to lend them; Once this money is gone, it will stop providing new loans. Once the loans are repaid, new loans are issued. The maximum borrowed amount at a given moment will never change and the interest -made interest has not been added to the initial amount.
When raising money and investing, the local economy is increasing at a significantly increased rate. This means that the area spends less time in the development phase and gets faster to a fully developed level. At that time, parent companies can enter the area and make more money.