A New Paradigm for Microfinance in Developed Nations

Abstract

As several studies have continuously proven repeatedly the benefits that microfinancing can bring to society, microfinancing has quickly caught the interest of both developed and developing countries. However, little study has been done into the particular models of microfinancing and their characteristic strengths and limitations. This particular study begins by differentiating the needs of the two parties (developed country and developing country) and focuses on South Korea and looks into what the best microfinancing model could be for developed nations. Analysis into the generic microfinancing model that South Korea’s government and Central Microfinance Foundation utilizes will prove to us the fundamental issues of utilizing a model whose structure does not fit the environment. From there, we will go on to study the developed nation’s environment and what it demands in the present, namely welfare. This set guideline will allow us to select a unique microfinance model from South Korea that fits the researched environment and we will analyze its success factors and limitations. Finally, we will check whether the final model seems applicable in other developed nations and conclude by suggesting a more improved model for developed nations than the generic microfinance model also used in developing nations.