Why is microcredit considered by many to be effective and self targeted tool for reducing poverty?

Question

Quizplus · Accepted Answer

Microcredit is considered effective and self-targeted tool for reducing poverty because low-income earners often face liquidity constraints, making it difficult to access traditional credit. Microcredit programs, which offer small loans with flexible repayment terms and lower interest rates, are designed to target this population. High-income earners are less likely to face such constraints and are also unlikely to find the high interest rates attractive, making microcredit less relevant for them. Therefore, option D (all of the above) is correct.

Why Is Microcredit Considered by Many to Be Effective and Self