Microcredit could bring macro gains

Over the past several years, microcredit has been used in many countries as a tool to alleviate poverty and offer low-income individuals and families access to credit facilities, otherwise denied by mainstream banking institutions. Generally speaking, microcredit consists of small-loans (from a few hundred to a few thousand dollars) both to individuals and micro-enterprises mostly in rural, but also in urban, areas without the need for collaterals.

Since its launch in the 1970s microcredit has raised the living condition of millions of people and fostered sustainable development. And as recognition of its effectiveness, Prof Muhammad Yunus, founder of Grameen Bank in Bangladesh which pioneered microcredit, was awarded the Nobel Peace Prize in 2006.

All this makes China an ideal country for microcredit services: It has a large rural population (though smaller than the official 720 million), a significant percentage of its population (about 100 million people) still lives in poverty and despite being on the verge of becoming the world's second largest economy, its per capita GPD and income remain low.