RISK MANAGEMENT THEORICAL EXAMINATION OF MICROFINANCE

Abstract

The poverty-stricken financing method began in 1970 as a microcredit system to be implemented in Bangladesh. In the following periods, financial services began to be defined as microfinance with increasing diversity. Participants in the microfinance system faced greater financial risks as complex and volatile processes from one side increased ambiguity in the markets. There are many reasons for these developments and changes. The first reason is that the borrowers have not used the loans for the stated purposes. Another reason is that the purpose of lenders to the poor is more profit-oriented than social purpose. With the divergence of microfinance and similar institutions from different basic objectives, borrowers face greater uncertainties and risks. In this study, the risks and risk management of microfinance institutions are examined in the theoretical framework