Microfinance

Microfinance has been a success story over past decades. Nevertheless, core elements of today’s microfinance framework have been used for centuries. In Ireland, the author Dean Jonathan Swift initiated entities called “loan funds”. These funds accommodated microcredits to entrepreneurs starting in 1720. About one hundred years later, the government established a statutory basis resulting in a boom of “loan funds”. A second example is the German “Sparkassen” and cooperative banking system. The first “Sparkasse” was established 1778 in Hamburg. In addition to saving deposits, services included loans for businesses and farmers. In 1846, Friedrich Wilhelm Raiffeisen and Hermann Schulze-Delitzsch founded cooperatives focusing on saving and lending deposits for small businesses and farmers. All three mentioned German banking institutions are major retail banks today: “Sparkassen”, “Raiffeisen” and “Volksbanken”.