Poverty Reduction

Finance
Banking on the Poor

A dynamic private sector, often driven by small and low income households, is the prime promoter of pro-poor growth. Financial services for the poor help in improving productivity and living standards of the poor, and contribute to the achievement of the Millennium Development Goals (MDGs) 1, 2, 6, and 7.

Microfinance is an effective development tool for promoting pro-poor growth and poverty reduction. Financial services enable poor and low income households to

• take advantage of economic opportunities
• build assets
, and
• reduce their vulnerability to external shocks that adversely affect their living standards.

It is now recognized that precisely because they do not have much money, poor and low-income households need financial services even more than other households do.

However about 90% of the 180 million poor households in the region still lack access to institutional finance. Microfinance provides them with funding for income generation, health insurance and educational savings, and housing finance. It helps the poor manage risk, build assets, increase income, and enjoy a better life.

ADB supports partner governments, commercial and rural banks, cooperatives and semi-formal institutions (including non-government organizations) to ensure permanent access to institutional financial services for the region's poor people and their micro and small businesses.

View ADB's knowledge products and operational expertise on addressing income poverty and promoting pro-poor growth through financial sector interventions.