Khamidov A.A. Peculiarities and Factors of Microfinance

Abstract: The subject of the study is the essence of microfinance and the factors that influence its development. During the analysis of a range of factors the author demonstrates the content of microfinance and the features of its mechanism. The article defines two types of functions that make microfinance competitive. Social functions: a means of poverty reduction, stimulation of entrepreneurship, a mechanism to minimise business criminality, reduction of shadow economy, and, a consequence, growing transparency of loans. Economic functions: growing financial sustainability of small businesses, distribution of small business, increase of range and quality of microfinance services, general improvement of Russian financial system, creation of the history of customer financing under small loans - increased financing opportunities. The methods of the research are systems analysis, which allows to define the features of microfinance and the factors of its development, as well as statistical analysis, that gives an opportunity to evaluate the dynamics of the microfinance market.  Novelty and conclusions. It has been justified that the main factors defining the microcredits are the short terms of the credit and significant credit rates. At the same time it has been shown that microfinance services are intended to satisfy the need for financial resources of small companies that cannot afford the services of banks and other credit institutions which are not particularly interested in operations with small loans. The research also specifies the range of microfinance institutional structures: formalised, semi-formalised, formalised, hybrid.

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