Breaking Down Microfinancing

by Derek Loosvelt | March 10, 2008

  • My Vault
Actress Natalie Portman didn’t grace the cover of the most recent New York Times Magazine (dubbed the “Money Issue”) to promote her latest film, but rather to promote her latest philanthropic project: microfinancing.

In addition to Portman, other celebrities and chic companies such as Benetton have jumped on the microfinancing bandwagon, and for good reason. The practice of loaning entrepreneurs in developing countries small sums of money has proven to be a monumental success. So much so, in fact, that the U.N. called 2005 the International Year of Microcredit, and Bangledeshi banker and economist Muhammad Yunus won the Nobel Peace Prize in 2006 for his work in microfinance.

However, the practice does have its limitations, and, as James Suroweicki explains in his latest column in this week’s New Yorker, its growing popularity might be a hindrance, more than a help, in the fight against poverty.

Filed Under: Finance

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