Roles of Microfinance in Poverty Alleviation in Vietnam (Essay Sample)

Micro Finance and Poverty Alleviation in Vietnam
Student's Name
Institution Affiliation
Instructor
Date
Concept of Microfinance
Microfinance is the wide-scale provision of financial services, primarily credit and savings, such as advances, money transfers, deposits, disbursement services, and insurance (Morales et al., 2018). These products are often given to underprivileged families that lack access to official monetary organizations. The microfinance groups comprise low-income households, the poor, and small and micro-enterprises. Most economically disadvantaged individuals face significant challenges while accessing formal financial services (Škare & Družeta, 2016). Brett Mathew, a microfinance specialist, created eight microfinance forms that the poor rely on to fulfill their financial objectives (Bansal, 2012). These sources contribute to long-term poverty reduction. At the same time, they aid in solving the main challenges that economically disadvantaged individuals face. There is an opportunity in terms of cash flows when the underprivileged have access to microfinance resources. The latter generates trading prospects and supports economic activities (Cull & Morduch, 2018). Therefore, in nations where access to monetary means is restricted to wealthy individuals, microfinance can promote economic development from a small to a considerable level.
Roles of Microfinance in Poverty Alleviation in Vietnam
Over the past two decades, the number of needy Vietnamese able to access microfinance platforms has grown considerably (BaoQuoc & Tsai, 2014). The institutions have contributed to the creation of employment opportunities for the poor. Resultantly, this has aided in diversifying income sources among households. Not only are low-income families increasing their total pay but also lessening risks in facing challenging conditions such as sickness, crops failure, and unmarketable goods (Thanh et al., 2019). Generally, microfinance allows most economically disadvantaged individuals to save their income to meet basic needs through increased and diversified income sources. These small savings have had a positive influence on families and the community at large. For example, they assist in managing risks in the short-run (Phan et al., 2014). Microfinance has also helped improve the daily lives of poor Vietnamese in matters such as access to proper family amenities, decent housing, and reduction of undernourishment rates. This has been through offering a means to better pay (Archer, 2019). Besides, the poor have broadened their market horizons and opportunities, increased their traveling, and paid for transport for businesses and education for their children (Zhou et al., 2019). These activities are deliberated as an investment for an improved life.
Microfinance institutions in Vietnam have created poverty elimination opportunities via credit operations. With government support, the organizations have established loan guidelines for the needy over a broad scale, including urban